UK house prices are on track to drop 8 per cent this year, the most since 2011, after declining for four months in a row, one of the nation’s biggest mortgage lenders said.
Halifax said its measure of property prices fell 1.5 per cent last month after a 2.4 per cent decline in November. The figures are similar to a reading from Nationwide Building Society, which last week reported the longest slump in prices since 2008.
Soaring interest rates and a tightening cost-of-living squeeze are weighing on the property market. The average cost of a home was £281,272 (€317,430), according to Halifax, down 4.3 per cent from a peak of £293,992 in August.
“The housing market will continue to be impacted by the wider economic environment,” said Kim Kinnaird, director at Halifax Mortgages. “As buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand.”
Prices over the whole of 2022 rose 2 per cent, reflecting gains in the first half of the year when buyers were snapping up properties outside city centres with space to work from home.
Halifax said prices are now falling in every region of the UK. The northeast of England saw the biggest slowdown in the annual pace of growth, falling 4 percentage points in December to 6.5 per cent annual growth.
Northern Ireland, which also has been a hotspot in recent months, cooled to 7.1 per cent annual growth from 9.1 per cent in November. In London, prices are up 2.9 per cent from a year ago in December, down from 5 per cent.
“These trends need to be viewed in the context of historic prices,” Kinnaird said. “The cost of the average home remains high – greater than it was at the start of 2022 and over 11 per cent more than house prices at the beginning of 2021.”
The Bank of England has increased its benchmark lending rate nine times since December 2021, putting it at 3.5 per cent, the highest since 2008. Investors anticipate another one percentage point of hikes this year.
That has driven-up mortgage rates, with the cost of an average two-year fixed rate mortgage now at 5.79 per cent and an average five-year at 5.63 per cent, according to Moneyfacts.
The central bank says around 4 million UK households will see a substantial increase in their own mortgage rates in the next year.
The property portal Rightmove said activity in the housing market spiked after Christmas, with a record number of new sellers putting homes up for sale on Dec. 26. The number of people viewing the site also jumped. – Bloomberg
