Nationwide reported that property prices in the United Kingdom increased by 10% in the year leading up to August, despite the strain on purchasers’ budgets.
The market continues to have stronger buyer demand than available properties, resulting in a double-digit annual increase for the tenth straight month.
In the past two years, the average property price increased by £50,000 to reach £273,751, according to the mortgage lender.
However, Nationwide stated that there were indications of a cooling market as both energy costs and mortgage rates increased.
Last month, the annual increase in house prices slowed marginally, down from 11% in July, but the market remains challenging for first-time buyers.
“Fast-rising rents offer little comfort and could keep some buyers searching for a home longer than they’d want,” said Myron Jobson, a senior personal finance analyst at Interactive Investor.
Even though the housing market is weakening, a crash is not imminent. The housing market remains challenging for would-be homeowners and those seeking to climb the property ladder due to the strong demand for homes that vastly exceeds the available housing supply.
Nationwide predicts that rising energy prices and mortgage interest rates will exacerbate the strain on household budgets during the next few months.
It was estimated that the least energy-efficient home might experience a bill increase of £2,700 per year or £225 per month.
There are indications that the housing market is losing momentum, according to Nationwide’s chief economist, Robert Gardner.
“We expect the market to decelerate more in the coming quarters as pressure on household budgets intensifies and inflation is projected to linger in double digits throughout next year.
In addition, it is widely anticipated that the Bank of England will continue to raise interest rates, which will have a chilling effect on the market if this is reflected in mortgage rates, which have already grown significantly in recent months.
