Finanze® Daily Digest - 20/10/2022

The Brief: House prices in London hit an all-time high of £552,755, up by +8.3% in August, according to data released by the Land Registry. London’s first-time buyers paid an average of £476,248, higher by +8.4% from the previous year. The South West region registered the highest year-over-year increase at +17.0%, where the average price rose to £335,927.

Why It Matters: The figures represent a lag in housing market statistics of a few weeks. These do not reflect the chaos from Kwasi Kwarteng’s mini-Budget. Current mortgage rates have already breached the 6.0% threshold and continue to impact market activity.

Finanze® Foresights: A lot has happened in the housing and mortgage markets in the past weeks, driven by the rise in gilt yields, the weakened pound, increased borrowing costs, and the return of inflation to a 40-year high. We expect the home price growth rate to slow down as a result of dampened buyer activity, but the shortage of homes and the impact of changes in stamp duty will still play a role in keeping prices from a drastic nosedive. We're also looking into how lenders will swiftly react after the BoE's interest rate hike this November.

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