With the rate of annual house price inflation falling to +4.7% in November (from +8.2%), the latest Halifax House Price Index reports a further slowing of the housing market across the UK – with the exception of the North East region. November’s drop in average house prices of -2.3% (vs. -0.4% in October) is the largest seen since October 2008 and the third consecutive fall, with a typical UK property now costing £285,579. According to Nationwide’s House Price Index, in real terms (i.e. inflation adjusted) today’s levels are c.11% lower than the 2007 peak and the same as prices were in 2004.
The North East of England is the only area of the UK where the annual rate of growth is in double figures, nudging to +10.5% (from +10.4%). Wales and the South West have seen the sharpest slowdown (+7.9% from +11.5% and +8.4% from +10.7% respectively): given that both areas were key hotspots of house price inflation during the pandemic, there is a suggestion that previous market drivers – such as the ‘race for space’ and increased demand for rural living – are now receding.
Whilst HMRC’s monthly property transaction data shows an increase in UK home sales in October 2022, with seasonally adjusted residential transactions up by 2.3% from September (at 108,480 transactions), data from both the Bank of England and RICS Residential Market Survey points to a continued downward trend. Bank of England figures show the number of mortgages approved to finance house purchases decreased in October 2022, by 10.6% to 58,977; meanwhile, RICS reports that new buyer enquiries fell for a seventh month in a row to a net balance of -38% in November – not as downbeat as the -53% seen the previous month but a clear indicator of continued weak demand.
Kim Kinnaird, Director at Halifax Mortgages, commented: “The market may now be going through a process of normalisation. While some important factors like the limited supply of properties for sale will remain, the trajectory of mortgage rates, the robustness of household finances in the face of the rising cost of living, and how the economy – and more specifically the labour market – performs will be key in determining house prices changes in 2023.”
Source Crowd Property