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UK house prices rise at slowest rate since 2008 crash

UK house prices are rising at the slowest rate for this time of year since the 2008 financial crash, according to new data highlighting the impact on the housing market of higher interest rates.

According to property website Rightmove, the average new asking price rose by 0.5% in the month to 7 October to £368,231, but it was the smallest post-summer bump since the 2008 crisis.

House prices dropped by 0.8% in the 12 months to early October as the lower activity fed through, Rightmove said, while the number of agreed house sales fell by 17% compared with a year earlier.

Separate figures from Halifax Bank earlier this month showed the fastest fall in annual house prices in 14 years in September.

The Bank of England had raised interest rates at 14 consecutive rate-setting meetings until last month as it tried to tame inflation. In September, its monetary policy committee finally voted to hold its key rate at 5.25%, which is still the highest since the financial crisis in 2008.

Tim Bannister, who studies property data for Rightmove, said asking prices usually rise after the summer holidays. Still, this year’s increase was “much more subdued” as sellers adjusted to the weaker market.

He said estate agents described the market as “the most price-sensitive ever”. The number of people enquiring about each property advertised on its website was up 8% in 2019, before the Covid-19 pandemic.

Renters are being squeezed as landlords try to pass on their higher mortgage costs amid a continued shortage in housing across much of the country. Separate data from estate agent Hamptons showed that the average rent in Great Britain rose to £1,325 per month in September, up from £1,186 a year earlier.

The steepest rent increases were in outer London, where prices rose by 16.2% on average, compared with 5.2% in Wales, the region with the slowest rental price growth. Overall, rents in Great Britain rose by an average of 11.7%.

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