Annual house price growth slows in September, but remains in double digits

  • Annual house price growth eased back to 10.0%, from 11.0% in August.
  • Prices little changed month-on-month, after taking account of seasonal factors
  • Wales and Northern Ireland the strongest performing regions in Q3, London the weakest
  • Cost of typical mortgage as share of take home pay above long run average in 10 of 13 UK regions, up from 1 pre-pandemic (see p2)  

Headlines

Sep-21

Aug-21

Monthly Index*

494.0

493.3

Monthly Change*

0.1%

2.0%

Annual Change

10.0%

11.0%

Average Price

(not seasonally adjusted)

£248,742

£248,857

* Seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated)

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:

“Annual house price growth remained in double digits for the fifth month in a row in September, though there was a modest slowdown to 10.0%, from 11.0% in August. House prices rose by 0.1% month-on-month, after taking account of seasonal effects. As a result, house prices remain c13% higher than before the pandemic began in early 2020.

Mixed picture across the UK in Q3

“Our regional house price data is produced quarterly and showed a mixed picture across the country in Q3 (the three months to September). While price growth accelerated in Wales, Northern Ireland and Scotland, most English regions recorded a slowdown.

“Wales was the strongest performing region with house prices up 15.3% year-on-year – the highest rate of growth since 2004. Price growth remained elevated in Northern Ireland at 14.3%. House price growth in Scotland picked up to 11.6% in Q3, in contrast to the previous quarter when it was the weakest performing part of the UK (at 7.1%). 

“England saw a slowing in annual house price growth to 8.5%, from 9.9% in Q2. Price growth in northern England (North, North West, Yorkshire & Humberside, East Midlands and West Midlands) continued to exceed that in southern England (London, Outer Metropolitan, Outer South East, East Anglia and South West).

“Yorkshire & Humberside was the strongest performing English region for the second quarter in a row, with prices up 12.3% year-on-year, followed by the North West, which saw an 11.4% rise.

“London was the weakest performer, with annual growth slowing to 4.2% from 7.3% last quarter. The surrounding Outer Metropolitan region, which includes places such as Luton, Watford, Sevenoaks and Woking, also saw a softening to 6.8%, down from 8.2% in Q2 (see full table of regional house price data on page 4).

Affordability becoming more stretched

“House prices have continued to rise more quickly than earnings in recent quarters, which means affordability is becoming more stretched. Raising a deposit remains the main barrier for most prospective first-time buyers. A 20% deposit on a typical first-time buyer home is now around 113% of gross income – a record high.

“Due to the historically low level of interest rates, the cost of servicing the typical mortgage is still well below the levels recorded in the run up to the financial crisis. However, even on this measure, affordability is becoming more challenging.   

“For example, if we look at typical mortgage payments relative to take home pay across the country, it is notable that in the majority of UK regions (10 out of 13) this ratio is now above its long-run average. By contrast, pre-pandemic, this was only the case in one region (London).

“Recent price patterns suggest an element of rebalancing is occurring where most of the regions that have seen the strongest price growth are those in which affordability is still close to or below the long run average.

Outlook – still clouded

“As we look towards the end of the year, the outlook remains uncertain. Activity is likely to soften for a period after the stamp duty holiday expires at the end of September, given the incentive for people to bring forward their purchases to avoid the additional tax. Moreover, underlying demand is likely to soften around the turn of the year if unemployment rises as government support winds down, as seems likely.

“But this is far from assured. The labour market has remained remarkably resilient to date and, even if it does weaken, there is scope for shifts in housing preferences as a result of the pandemic – such as wanting more space or to relocate – to continue to support activity for some time yet.”

Quarterly Regional House Price Statistics (Q3 2021)

Please note that these figures are for the three months to September, therefore will show a different UK average price and annual percentage change to our monthly house price statistics.

Regions over the last 12 months

Region

Average Price

(Q3 2021)

Annual % change this quarter

Annual % change last quarter

Wales

£190,700

15.3%

13.4%

N Ireland

£167,103

14.3%

14.0%

Yorks & H’side

£188,457

12.3%

13.0%

Scotland

£171,134

11.6%

7.1%

North West

£191,326

11.4%

10.9%

North

£147,358

10.9%

11.2%

East Midlands

£215,284

10.5%

12.2%

West Midlands

£220,558

9.9%

12.2%

South West

£286,006

9.9%

10.4%

Outer S East

£320,050

9.8%

10.9%

East Anglia

£260,109

8.9%

9.7%

Outer Met

£402,317

6.8%

8.2%

London

£500,980

4.2%

7.3%

UK

£247,535

10.3%

10.3%

 


UK Fact File (Q3 2021)

Quarterly average UK house price

£247,535

Annual percentage change

10.3%

Quarterly change*

1.8%

Most expensive region

London

Least expensive region

North

Strongest annual price change

Wales

Weakest annual price change

London

* Seasonally adjusted

Nations – annual & quarterly price change

Nation

Average Price

(Q3 2021)

Annual % change this quarter

Quarterly % change*

Wales

£190,700

15.3%

3.7%

N Ireland

£167,103

14.3%

2.0%

Scotland

£171,134

11.6%

3.0%

England

£283,455

8.5%

1.0%

* Seasonally adjusted