House Prices Fall for fourth straight month

The average house price fell a further 1.5 per cent in December according to the Halifax - and that comes on top of a 2.4 per cent fall in November. 

The annual rate of growth - including almost a year ago when house prices were rising rapidly - now stands at a meagre 2.0 per cent after four straight months of price falls.

The typical UK property now costs £281,272 - down from £285,425 last month - with the rate of annual growth slowing in each of the nations and regions of the UK.  

Kim Kinnaird, the director of Halifax Mortgages, says: “As we’ve seen over the past few months, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, are leading to an overall slowing of the market. 

“The housing market was a mixed picture in 2022. We saw rapid house price growth during the first six months, followed by a plateau in the summer before prices began to fall from September, as the impact of cost of living pressures, coupled with a rising rates environment, began to take effect on household finances and demand. 

“These trends need to be viewed in the context of historic prices. 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 first half of last year was a very strong period for sellers, between January 2022 and August 2022, the average cost of a home rose by over £17,000 to £293,992 (growth of 6.0 per cent), setting a new record high. 

“As we enter 2023, the housing market will continue to be impacted by the wider economic environment and, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall, with house prices forecast to fall around 8.0 per cent over the course of the year. It’s important to recognise that a drop of 8.0 per cent would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.” 

Sarah Coles, senior personal finance analyst at business consultancy Hargreaves Lansdown, has a different perspective on the data.

She says: “The typical three-month lag between agreeing a sale and completion means this reflects buyer confidence in September, which only included a single week after the mini-budget. A major chunk of these sales were based on mortgages that had already been approved, so the chaos unleashed in the mortgage market by Kwasi Kwarteng’s announcement won’t necessarily have personally affected these buyers. It means this price drop is a product of the gradual easing of enthusiasm for property at the start of the month, and the collapse of confidence in the final week.

“Mortgage rates have gradually dropped back from the highs in the aftermath of the mini-budget, but remain significantly higher than before the chaos kicked off, and the shock of the hikes has taken a toll.

“Overwhelmingly indicators point to more decline for the market in the coming months. RICS figures show buyer demand fell for the seventh consecutive month, the Bank of England figures show mortgage approvals for the coming months fell by a fifth in November, and Zoopla says the average discount being accepted on asking prices has widened to 4.0 per cent.

“As prices continue to drop back each month, it persuades more buyers to back away, and it’s only a matter of time before we start to see this translate into annual price drops. How fast and how far they fall will depend to an enormous extent on the wider economic picture, and how deep the recession turns out to be. However, with Halifax predicting declines of 8.0 per cent this year, we can be fairly certain things aren’t going to be pretty.”

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