7 December 2022
If you are covering the Halifax House Price Index, please see the following comment from Karen Noye, mortgage expert at Quilter:
"The damage inflicted on the housing market by the mini-budget is now starting to be laid bare as today’s Halifax house price index shows a sizable dip in the UK average house price. The average price fell by -2.3% in November and now stands at £285,579 down from £292,406 last month. Similarly, this is clearly not just a blip as prices are down 1% for the quarter.
"When Liz Truss and Kwasi Kwarteng’s infamous plans to get the economy motoring were announced in late September, the markets reacted violently and subsequently high long term predictions for interest rate hikes were quickly priced into mortgage products by lenders. This brought an abrupt end to what has been a long era of cheap money for property purchases. Increased rates, sky high inflation and general uncertainty will quickly put lots of potential first time buyers and movers off, reducing demand and house prices with it.
"The good news is that since those torrid days the predicted interest rate peak has dropped somewhat making mortgages more affordable but still a long way off what the UK has become used to. However, it may still be that particularly as we experience cold weather and subsequent expensive energy bills, those on the fence about a relocation or a step onto the property ladder will choose to wait it out, further reducing prices as we go through the winter.
"If, as the Bank of England predicts, inflation starts to ease next year, and interest rates can be dropped then house prices are unlikely to be in decline for too long. There is simply not enough stock on the market and people cannot put their life on pause forever. Just yesterday, Housing Secretary Michael Gove succumbed to pressure and has diluted government house building targets following a rebellion. Some MPs have since said that this could result in fewer homes being built. With less stock coming on to the market and the population crying out for homes its only a matter of time before house prices return to their upward trajectory. This represents good news for homeowners but for ‘generation rent’ this will continue to put owning a home out of reach as wage growth lags house price inflation.
"For those who are coming to the end of their fixed rate deals and are nervous of what could be a shocking rise in monthly mortgage payments its key you speak to your lender or a mortgage adviser who can look at the choice of products out there from all lenders and ensure that the best deal for your unique financial situation is sought. Getting good value has never been more important and seeking help can unlock that."
