In recent months, interest rate rises have made mortgages more expensive and rising inflation has reduced peoples’ spending power, resulting in falling house prices. Two of the UK’s major lenders have recently published house price surveys.
The Halifax House Price Index for September 2023 found that average house prices for the month were 4.7% lower than prices for the same month in 2022. Commenting on the results of the survey, Kim Kinnaird, Director of Halifax Mortgages said “Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.” It is expected that high mortgage rates will continue to put downward pressure on house prices as we move into 2024.
The Nationwide House Price Index found that house price decline for the year to September 2023 was 5.3%. Robert Gardner, Nationwide’s chief economist, commented: “There are signs that more buyers are looking towards smaller, less expensive properties, with transaction volumes for flats holding up better than other property types.
It is uncertain whether we will see a full housing price crash. Back in March, the Office for Budget Responsibility (OBR) predicted that house prices would decrease by 10% over the next two years and some commentators predict that further interest rate rises could cause steeper price falls this Autumn.
November 24th, 2023
