ONS: Lack of supply pushes house prices up 11.8%

House price growth has risen to a record 11.8% in the year to September – leading to fresh concerns about a lack of housing supply.

This means the typical house price is £28,000 higher than this time last year, according to figures form the Office for National Statistics.

House prices surged during the pandemic with the help of the stamp duty holiday, but it seems the squeezed nature of UK supply is keeping prices high.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown: “While we can expect sales to die back somewhat in October, the same can’t be said of house prices.

“We would expect house price growth to slow over the coming months, and if we get interest rate rises over the next few months, this could provide even more of a drag on prices.

“However, we’re still expecting prices to keep rising, because there are so few properties on the market.

“Buyer numbers are still outstripping sellers, and the number of properties on agents’ books continues to shrink. It means more people chasing fewer properties, which means prices are unlikely to fall in the immediate future.”

Prices in the North West saw the highest annual growth at 16.8%, while London saw the lowest annual growth of 2.8%.

The North East has the cheapest property prices in the country, at an average of £153,000.

Emma Cox, sales director at Shawbrook Bank, said: “Talk of a seasonal correction is premature and, despite suggestions to the contrary, these figures demonstrate that market activity remains positive with buyers making moves up and down the chain.

“It is clear that house prices continue to be underpinned by a chronic lack of supply which shows no sign of abating. However, amid speculation that December may see the Bank of England finally decide to pull the trigger, and raise the base rate to combat inflation, we could see a slowdown in demand – particularly at the lower end of the market.

“Moving forward we know that many landlords and property investors are widening their search away from city centres. With the emergence of the so called ‘cocktail belt’, they may want to act swiftly to try and lock-in competitive mortgage rates ahead of any potential base rate rise.”

With the inflation rate rising to 4.2%, the Bank of England are likely to increase the base rate from 0.1% in December to keep it in check.

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