Although the rate of decline has moderated, the UK’s largest mortgage lender has predicted that house price declines will last into next year.
According to The Halifax, a division of Lloyds Banking Group, home prices were 4.7% lower in September than they were a year ago.
Prices decreased by 0.4% from the prior month, however this was a significantly smaller decline than in the past.
The lender predicted that the market would be impacted by high interest and mortgage rates.
“Homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly turned into a buyer’s market,” said Kim Kinnaird, director of Halifax Mortgages.
However, because interest rates would remain higher for a longer period of time than many had anticipated, demand would be constrained, and “downward pressure on house prices into next year,” She said.
- Mortgages on average for five years fall below 6%.
- Renters vying for each property increase from 20 to 25.
When faced with high mortgage rates, purchasers were reportedly preferring smaller, more inexpensive homes, according to competitor lender Nationwide earlier in the week.
Both the Halifax and Nationwide polls use data from their own mortgage lending, excluding out people who buy houses outright or engage in buy-to-let transactions. The majority of home transactions currently include cash buyers, according to the most recent official data.
According to the Halifax, the price drop in September marked the sixth straight monthly decline in pricing, bringing the price of a typical UK property down to £278,601. Nevertheless, this is still £39,400 more than it was in March 2020, before the epidemic caused costs to soar.
“The property market is offering a much stronger supply of homes than it did during 2021, when we saw frantic buying activity,” said Nicky Stevenson, managing director of estate agent group Fine and Country. “This is giving buyers much more choice and headroom to haggle – though it is also playing a part in pushing down prices during negotiations with sellers.”
According to the Halifax, while being around £14,000 below their peak in August 2022, real estate values are still 1% higher than they were in December 2021, when the Bank of England began its string of base rate increases.
According to investment platform Bestinvest’s Alice Haine, a personal finance analyst, “the housing market is expected to remain subdued into the next year as the drag effect from the Bank of England’s 14 interest rate hikes delivers a heavy blow to affordability levels.”
“While some buyers have been forced to reduce the size and value of the home they purchase to afford mortgage repayments, others are abandoning moving plans altogether.”
Some first-time buyers, she added, would be glad to see prices drop and could pick longer-term mortgages to spread out the cost, even though doing so would result in higher long-term costs.