Annual growth was slower than the 16% recorded in July, which the Office for National Statistics (ONS) attributed to the “sharp rise” in house prices in August 2021 following changes made to the stamp duty holiday. 

House prices are £31,659 higher than they were this time last year while monthly growth stood at 0.9%. 

In England, house prices have risen by 1% since July and 14.3% annually to reach £315,965. Properties in the East Midlands saw the largest rise in price with a 16.9% increase to £255,114. The region also saw the biggest monthly uptick, with a 2.3% jump in prices since July. 

The West Midlands was the only region to record a decline in house prices, with a -0.2% monthly fall to £255,202. However, it recorded a 13.9% yearly rise. 

In Wales, house prices have risen by 0.2% since July and 14.6% since last year to an average of £220,059. 

Average house prices in Scotland rose to a record level of £195,000, representing a 9.7% yearly increase. In Northern Ireland, house prices went up by 9.6% in the year to Q2 to reach £169,000.  

Former homeowners paid £362,680 on average for a house in August, a 14.6% annual rise. First-time buyers saw average prices rise by 14% to £262,022. 

‘Plenty of pent-up demand’

Jeremy Leaf, north London estate agent and a former Royal Institute of Chartered Surveyors (RICS) residential chairman, said the historic figures showed the strength of the market before turbulence hit in September. 

He said: “Since then, activity has slowed and prices have softened a little but there is still plenty of pent-up demand, not least to take advantage of favourable existing mortgage rates before they rise even higher.  

“Fortunately, most sellers are recognising the importance of negotiating bearing in mind rising inflation, which is making it particularly difficult for first-time buyers or those seeking larger loans.” 

Housing market resilient…for now

Kate Davies, executive director of Intermediary Mortgage Lenders Association (IMLA), added the data displayed the “resilience” of the housing market but noted there were predictions of a decrease in prices in coming months. 

“The current cost-of-living crisis, along with record petrol and energy prices, rising inflation and tax rises mean most households are wary of moving up the ladder, putting a dampener on the extreme house price growth seen in recent years.  

“While there have been recent talks of a ‘crash’ in the media, there is certainly no need to panic – property is a long-term investment and prices have always risen after short-term falls,” she added. 

‘Market couldn’t be tougher for FTBs’

James Turford, co-founder and COO of Even, said: “House prices have been defying gravity for months in the face of rising interest rates, exacerbating affordability issues for first-time buyers. Given the eye-watering levels prices have reached, news of some softening will come as scant comfort for those stuck renting.  

“And with real-terms wages falling, sky-high inflation and soaring mortgage rates, the market couldn’t be much tougher for first-time buyers.” 

He said the stamp duty cut would not make things easier as it would “support property values rather than first-time buyers”.  

“Now would be the time to extend more targeted support for the first-time buyer market. Instead we’re seeing the end of Help To Buy this month, leaving the private sector to pick up the pieces,” he added.

Lewis Shaw, founder of Shaw Financial Services, said: “Even with the stamp duty cut, most first-time buyers were already exempt from that tax and are facing the highest rates. If first-time buyers can’t afford the mortgage payments, they won’t buy. Given that first-time buyers are the oil that keeps the machine turning, the property market begins to seize if they dry up. This all points to a change of direction from a seller’s to a buyer’s market.

“Add in the glut of buy-to-let properties about to hit the property portals as landlords decide the game is up, and you’ve got all the ingredients for a property crash.”