The latest Halifax Property Index for October 2022 was published today showing that the average house price in the UK is now £292,598, a fall of 0.4% in a month. That said, we are merely back to where house prices were 3 months ago.
There was just one area where property prices did not fall and that was the North-East of England. In addition, whilst Wales and the West Midlands did fall back, they remained the areas with the highest annual property prices growth at 11.7% pa.
The bigger picture is when you look at yearly growth nationally. Average annual growth was 8.3% pa in October, down from 9.8% pa in September and that is a fall of 1.5% pa overall, showing that there is a significant shift to property slowdown.
First-time buyers have been hardest hit with Bank of England interest rate increases as new mortgages available today are at 5-6% pa plus which are around double the cost of first-time buyer mortgages available in Spring 2022. Whilst the Financial Conduct Authority and the Bank of England has relaxed mortgage affordability stress tests, it is still much more difficult to buy the property that you want with a mortgage that you can afford.
If the trend continues and we experience 0.4% falls per month, that could be a 4.8% fall in the coming year. We suspect it is likely to be nearer an 8% to 10% fall as mortgage affordability is stretched.
Do not be disheartened though. We are heading into recession and will likely be in recession for 18 months to 2 years. Inflation will eventually start to push wages up as we come out of recession and then house prices we believe will rise to new records. Indeed, if house prices do fall 10% over the coming year, it will only mean that your property has fallen back to values in summer 2021. Most of us will still be in positive territory when looking back over the last few years.