The average price of a property sold in the month dropped to £271,079, down from £272,664 in July. Annual house price inflation slowed to 2.1 per cent, from 2.4 per cent the previous month, according to data from the Nationwide.
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“An average earner buying the typical first-time buyer property with a 20 per cent deposit faces a monthly mortgage payment equivalent to around 35 per cent of their take-home pay, well above the long run average of 30 per cent,” he added.
Tom Bill, head of UK residential research at estate agent Knight Frank, cautioned the Budget speculation could chill the market. He said: “House prices have drifted lower since March as the market digests higher rates of stamp duty and supply continues to outstrip demand.
Karen Noye, mortgage expert at Quilter, says affordability pressures are still weighing heavily on the housing market: “Speculation around potential reforms in the Chancellor’s upcoming Budget, including possible levies on high-value homes or changes to capital gains tax on primary residences, could also cause hesitation among sellers. This would tighten supply further and paradoxically push prices higher, worsening conditions for new entrants to the market.”
“The almost inevitable talk of tax increases on the horizon has resulted in some of our buyers deferring location decisions until the picture becomes clearer, possibly even after the Budget,” he said.
Natonwide’s Robert Gardner says the costs of servicing a mortgage are becoming a barrier (Photo: Nationwide)
“Combined with the fact that mortgage costs are more than three times the levels prevailing in the wake of the pandemic, this means that the cost of servicing a mortgage is also a barrier for many.”
“Borrowing costs are likely to moderate a little further if bank rate is lowered again in the coming quarters. This should support buyer demand, especially since household balance sheets are strong and labour market conditions are expected to remain solid.”
“There are challenges ahead, however, such as increasing the supply of new sustainable homes, providing assistance to first-time buyers and for lenders, ensuring that the latest drop in interest rates translates into more affordable mortgage products.”
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