7 November 2022
If you are covering the Halifax House Price Index, please see the following comment from Karen Noye, mortgage expert at Quilter:
“This morning’s Halifax house price index for October shows the challenging economic circumstances are beginning to take a real toll on the housing market. For the third time in the past four months house prices dropped, this time by 0.4%. This marks the sharpest fall seen since February 2021 and takes the average house price to a five-month low of £292,598.
“Despite the challenges of the past few years, the housing market has managed to maintain its momentum. However, it looks to have finally met its match as the impact of the mini-budget and the ongoing cost-of-living crisis proved too heavy for prices to continue rising. The pace of annual growth has slowed considerably as a result, up by 8.3% in October compared to 9.8% in September.
“It remains to be seen just how far house prices might drop, but there are several factors that could have an impact. Many are looking to the autumn budget for clarity, and the market reaction could help to reduce inflation in the longer term and put a halt to rising interest rates. However, the number of people facing huge increases in their mortgage payments is growing and could become unmanageable for some.
“One of the few policies left standing from the mini-budget was the cut to stamp duty. If this remains in place as expected, it could lower the size of the house price drop as people may opt to take advantage of the tax saving despite the economic backdrop. However, soaring inflation, rising interest rates and high energy bills are putting a hold on many people’s plans to move.
“Ultimately, costs are rising across the board and as the winter draws in and the real impact of rising energy bills hits, people’s finances will be stretched even further. With mortgage rates rising, many people will need to reconsider moving home and could opt to stay put to ride out the cost-of-living crisis instead, while others will need to move into cheaper properties. As demand falls and the level of stock increases, we will no doubt see a further drop in house prices.”
