House Price Index Report September 22 Sep 27, 2022 Surprisingly resilient market despite economic pressures. The average price of property coming to the market rises by 0.7% (+£2,587) in the month to £367,760: This month’s rise in new seller asking prices is in line with the ten-year September average increase of 0.6% The middle and high-end market sectors are driving price rises this month, with a new record average asking price (£340,513) in the “second-stepper” category (three bedrooms and non-detached with four bedrooms) First-time buyers facing cost pressures, though new stamp duty cuts may provide some additional support: The stamp duty cut from Friday’s mini-budget means that two-thirds of homes (66%) are now exempt from stamp duty for first-time buyers in England, and a third of all homes are exempt for all buyers (33%) Average monthly mortgage payments for new first-time buyers are currently £1,057, which is 40% of an average gross salary for the first time since November 2012. They will jump to £1,114 per month if lenders pass on the latest interest rate rise of 0.5% The market remains surprisingly resilient despite growing economic pressures: Buyer demand is up 20% on the pre-pandemic five-year average, and the stamp duty cut could stimulate some more demand over the next few months The number of homes coming to market has risen back to 2019 levels, giving buyers more choice The average price of property coming to market rises by 0.7% (+£2,587) this month to £367,760. This is in line with the average September rise of 0.6% over the last ten years. Price growth this month is driven predominantly by the middle and high-end market sectors, with the “second stepper” category (three bedrooms and non-detached with four bedrooms) reaching a new record average asking price of £340,513. Buyer demand in these sectors is up by 2% even compared to the frenetic market of last year, while more choice is now also available compared with 2021. These numbers suggest that for those who can, moving up the ladder to a home with more space remains a priority, even at a time when personal finances are stretched First-time buyers are facing cost pressures, though the announcement to cut stamp duty may provide some support. The average monthly mortgage payment for new first-time buyers putting down a 10% deposit has now reached £1,057, which is 40% of an average gross salary for the first time since November 2012. Following the Bank of England’s latest interest rate rise of 0.5%, with the base rate now at 2.25%, this number could jump to as high as £1,114 per month if lenders pass on the rise to new first-time buyers. A 10% deposit on a first time buyer type home is now 57% higher than 10 years ago, while average salaries have increased by 32% over the same time, making it increasingly difficult to save the necessary deposit. These factors combined have perhaps contributed to demand in the first-time buyer sector being down by 8% on the same period last year, though to put this into context, demand for first-time buyer type properties is still up by 27% compared with the five-year pre-pandemic average between 2015 and 2019. The announcement to cut stamp duty for first-time buyers may also drive some additional demand in the coming months, though because it is permanent, any increase in demand is likely to be steady rather than a surge. Two-thirds of homes (66%) are now exempt from stamp duty for first-time buyers in England, and by raising the stamp duty threshold from £125,000 to £250,000, a third of all homes currently for sale (33%) are now completely exempt from stamp duty in England, compared with 7% before the cut. The overall market remains surprisingly resilient despite the headwinds. Demand continues to ease slightly from the heady levels of last year as expected, but even with the fall in first-time buyer demand, total demand is down by only 2% on the same period in 2021, and the stamp duty cuts could stimulate more demand. Compared with the pre-pandemic five-year average, total buyer demand is up by 20%. The number of homes coming to market has risen by 16% this month compared to this time last year, which is a return to 2019 levels.