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ONS figures show house price inflation decreased in August

So, house price inflation has decreased but what does this mean in real terms for UK buyers and those looking to sell?

A photo of Grace Lynch, the author

By Grace Lynch

Published on: 19 October 2023

5 min read

ONS figures show house price inflation decreased in August

If you’re thinking about buying a home this year, you’ll be happy to hear that house price inflation dropped in August 2023. This is according to new figures published by the Office for National Statistics (ONS) this month.

The UK’s house price inflation levels hit 0.2% in the 12 months up until August 2023, significantly lower than the 0.7% that had been seen up until July 2023. These figures have been gradually slowing down since July last year, where house price inflation sat at a staggering 13.8%.

So, house price inflation has decreased but what does this mean in real terms for UK buyers and those looking to sell? Sadly, what is good news for some people won’t be welcome news for others and those looking to sell might find themselves losing out significantly compared to even 12 months ago.

More information – ONS – Inflation and Price Indices

QUICK SUMMARY – House price inflation decreases in August

There is always a lot of talk about inflation in the news, especially over the last 12 months. But how will changes to property price inflation affect UK consumers who are looking at buying property before the end of 2023?

  • While the average cost of a house in the UK hasn’t changed much since last August, it is still £9,000 higher than it was in March 2023 – not ideal news if you were hoping to find a bargain.
  • As expected, London is still the most expensive place to buy property in the UK, with an average price of around £536,000 (though London prices did drop slightly between July and August).
  • If you’re worried about inflation and not sure about your best options to buy a house or how much you can borrow, it’s worth talking to a qualified mortgage expert for help and advice.

The Office for National Statistics has revealed that UK house price inflation sat at around 0.2% in August 2023, marking minimal changes in pricing since August 2022.

Is high inflation good for homeowners?

Inflation is something that can feel a bit tricky to understand if you’re not familiar with how it works. it’s based on supply and demand so if there is less of a certain product and supply is going down, inflation goes up (e.g. if less people are buying or selling houses).

The easy answer to ‘is high inflation good for homeowners?’ is generally yes. If inflation is higher that means the value of your home will be higher and so you’ll be able to sell for a higher price.

How does inflation affect housing prices?

Inflation rates and house prices are always going to be linked, as inflation affects the cost of all goods and services in the UK. If inflation is high, this can have a huge impact on how much you could expect to pay for a house on average.

You can use house price inflation calculators from Banks and Building Societies, and Real Estate Agents to help give you an idea of how inflation is affecting the value of your home. To help you out, we’ve put together a list of some of the most popular ones.

Here’s a breakdown of ONS’s report about average UK house pricing, to help give you an idea of how much it may cost to buy in your area.

  • England’s average house price is £310,000 (though of course exact pricing will vary depending on the area of England you wish to buy in)
  • The average cost of buying a house in London is £536,000 – the most expensive area as expected.
  • Prices have risen most dramatically in the North East of England, with a jump of 3.6%, though the East overall has seen a drop of 1.6%
  • Wales’ average house price is £217,000, a reduction of 0.1% compared to last year (and almost £100,000 less than buying in England)
  • Scotland’s house prices have risen slightly to £194,000, an increase of 1.1% compared to last year (but still leaving Scotland the cheapest option for buying property in mainland UK)

What does this mean for UK buyers?

With house prices now rising more slowly, this does present some good opportunities for people like first time buyers who may otherwise struggle to get their foot on the property ladder.

Does this announcement affect renters as well?

The Office for National Statistics did also publish some interesting data around private rental figures in the UK, suggesting that the cost of renting has gone up by about 5.7% in the 12 months till August 2023. This is a rise of 5.6% in England, 6% in Scotland and a shocking 6.9% in Wales.

If you rent property in the UK this probably isn’t a surprise to you, as prices have been climbing significantly in the last year leaving many UK consumers struggling. This rise is the largest annual change since January 2016.

if you’re struggling with higher rent prices there are options available that may be useful for you. here’s a list of handy resources and organisations that we found that may help:

  • Citizen’s Advice (offers free guidance for UK consumers)
  • National Debtline (their free budgeting tool can help you manage your bills)
  • Mental Health and Money Advice (this service can offer support and resources if your mental health has been affected by rising bills in the ongoing cost of living crisis)
  • GOV.uk (the government website also explains potential support that is available such as benefits)

The latest figures definitely reflect how challenging the property market has been for the UK this year, with activity being much more subdued than it has been in the past. Higher interest rates and an ongoing cost of living crisis has made many potential buyers cautious in 2023.

With the slowing in inflation combined with experts’ beliefs that the Bank of England base rate has now hit its peak, this could actually be good news for the UK property market. This isn’t to say the market is going to bounce back immediately, but it does indicate the potential for lower pricing moving forwards.

More home and mortgage news

Here’s more of the latest financial news impacting homes and mortgages in the UK.

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