UK house prices falling at fastest rate in more than a decade – what it means for your money
HOUSE prices have fallen by 2.3% in November, the biggest monthly drop in over a decade.
Halifax bank's index showed annual house price growth slowed to 4.7 per cent, from 8.2 per cent in October.
It means the average UK house price was £285,579, down from £292,406 last month, a drop of more than £6,000.
The house price slowdown comes after mortgage rates hit a 14-year high in September.
The spike was caused by political and economic turmoil following former Chancellor Kwasi Kwarteng's mini-Budget.
They've since come down from that and the typical two and five year mortgage deals are now below 6 per cent for the first time in two months, according to Moneyfacts.
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But they still remain higher compared to last year, as the Bank of England has hiked rates to tackle soaring inflation.
Rising rates and the cost of living crisis have meant fewer people are looking to buy a home or move home - badly impacting the housing market.
Higher energy bills and food prices are also squeezing incomes making it harder to get a home loan.
Kim Kinnaird, director of Halifax Mortgages, said: “The monthly drop of 2.3 per cent is the largest seen since October 2008 and the third consecutive fall.
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“While a market slowdown was expected given the known economic headwinds – and following such extensive house price inflation over the last few years (19 per cent growth since March 2020) – this month’s fall reflects the worst of the market volatility over recent months.
“Some potential home moves have been paused as homebuyers feel increased pressure on affordability and industry data continues to suggest that many buyers and sellers are taking stock while the market continues to stabilise."
Halifax's index is just one measure of house prices, although others have said house prices are falling or are expected to fall.
Nationwide said they dropped 1.4 per cent between October and November - their biggest monthly fall since June 2020.
Meanwhile, Rightmove said the average home price fell by more than £4,000 in November compared to October - a 1.1 per cent month-on-month drop.
The Office for National Statistics (ONS) said UK house prices were level between August and September this year.
And Lloyds Bank has predicted house prices could fall by as much as 8 per cent next year.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: "We’re not yet in the realms of annual price falls, but if this pace continues, it won’t be long until we are.
"What’s even more worrying is that it takes around three months for a sale to move from being agreed to being completed, so these figures reflect sellers’ decisions in August – before the disastrous mini-budget.
"It means that buyers were already getting cold feet before Kwasi Kwarteng’s announcement forced mortgage rates through the roof."
Halifax said house price annual growth slowed in all parts of the UK apart from the North East.
It added Wales and south-west England recorded particularly strong slowdowns in annual house price growth.
It comes after house prices generally shot up in the last two years after the government introduced a stamp duty holiday and people looked for more space outside of cities.
Alice Haine, personal finance analyst at Bestinvest said: “Britain’s housing market is succumbing to the wider gloom affecting the economy following the dizzying price rises seen during the pandemic.”
Emma Cox, managing director of Shawbrook Bank, meanwhile said: “The combined effects of double-digit inflation, alongside the UK’s slow march into recession is keeping many would-be first time buyers away from entering the market.”
Nationwide said average house prices and annual percentage increases are as follows:
- East Midlands, £244,429, 9.5%
- Eastern England, £339,683, 7.3%
- London, £549,160, 5.2%
- North East, £173,587, 10.5%
- North West, £229,218, 9.4%
- Northern Ireland, £185,097, 9.1%
- Scotland, £203,132, 6.5%
- South East, £397,562, 7.6%
- South West, £307,750, 8.4%
- Wales, £220,689, 7.9%
- West Midlands, £253,253, 9.4%
- Yorkshire and the Humber, £207,800, 9.3%
What will happen to house prices in the coming months?
Experts are predicting house prices will continue to fall over the coming months as increased mortgage rates keep potential buyers off the market.
Nick Morrey, technical director at mortgage brokers Coreco, previously told The Sun house prices may fall by up to 10 per cent over the next year.
"A fall in prices after two very strong years and the cost of living rising was anticipated," he said.
"We can expect this to continue through into 2023 but settle down as the year progresses."
Meanwhile, James Forrest, managing director of estate agent Barrows and Forrester, said: “It’s important that we view recent declines in context, as we are now merely starting to see a return back to pre-pandemic norms.”
The drop in house prices is good news for first-time buyers wanting to get onto the ladder, but with mortgage rates higher than before it might be harder to get approved for one.
Most people will see a drop in the value of their home, raising fears of households falling into negative equity.
This is when a house or flat is worth less than when you took out a mortgage on it.
But because prices have gone up so much in recent years, this probably won't be the case.
Despite recent drops in house prices, year-on-year they're still up.
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Nationwide's House Price Index said the average price of a home in November 2021 was £252,687, over £10,000 less than November this year.
Rhys Schofield from Peak Mortgages, said: "House prices having probably increased by 20 per cent in the last two years so most homeowners have still done very well in the 2 ½ years."