Annual house price
Prices fell by 1.4% month-on-month, the largest fall since June 2020.
“Housing affordability for potential buyers and home movers has become much more stretched at a time when household finances are already under pressure from high inflation.”
According to the latest Nationwide House Price Index, annual UK house price growth slowed to 4.4% in November, down from 7.2% in October.
Prices fell by 1.4% month-on-month, marking the most significant drop since June 2020. This followed a 0.9% decline in October.
Nationwide’s chief economist, Robert Gardner, stated: “The fallout from the mini-Budget continued to impact the market, with November seeing a sharp slowdown in annual house price growth to 4.4%, from 7.2% in October.”
Nationwide House Price Index
“While financial market conditions have stabilised, interest rates for new mortgages remain elevated. The market has lost significant momentum. Housing affordability for potential buyers and home movers has become much more stretched. This comes when household finances are already under pressure from high inflation.
“The market looks set to remain subdued in the coming quarters. Inflation is expected to stay high for some time. The Bank Rate is likely to rise further as the Bank of England seeks to ensure economic demand slows to reduce domestic price pressures.
“The outlook is uncertain, and much will depend on how the broader economy performs. A relatively soft landing is still possible.
“Longer-term borrowing costs have fallen back in recent weeks and may moderate further. This is especially likely if investors continue to revise their expectations for the future path of Bank Rate. Given the weak growth outlook, labour market conditions are likely to soften. However, they are starting from a robust position, with unemployment still near 50-year lows.
“Moreover, household balance sheets remain in good shape, providing significant protection from higher borrowing costs, at least for a period. Around 85% of mortgage balances are on fixed interest rates. Stretched housing affordability also reflects underlying supply constraints, which should support prices.”
Garrington Property Finders
Jonathan Hopper, CEO of Garrington Property Finders, commented:
“Two months on from the chaotic aftermath of the mini-Budget, buyers and sellers are still locked in a standoff over what constitutes fair value.
“So far, all the signs are that sellers are flinching first. Sensing that the balance of power is tilting ever further in their favour, buyers frequently ask for– and get – significant price reductions.
“Asking prices are starting to come down too, as sellers compete for the attention of an increasingly rare and powerful group – proceedable buyers.
“In some areas, sellers’ fears of falling prices have unleashed a surge in supply, as those with a home to sell rush to get it on the market before prices soften further.
“For all the speed of the price correction, this isn’t yet a recessionary market, and there is still activity on the front line as committed and strategic buyers sense a moment of opportunity.
“But while mortgage rates have come down off October’s highs, the coming months will see many would-be buyers have to rethink what they can safely afford.
“If this translates into further downward pressure on prices, the winter will be long and hard for sellers.”
Highcastle Estates
Zaid Patel, director at London-based estate agents Highcastle Estates, added:
“We are now in a market where buyers are testing their chances by offering 10%-15% below the asking price. They aim to see which sellers might agree to sell quickly. Both property investors and first-time buyers are making lower offers due to rising mortgage costs.
As the year draws to a close, the property market often experiences a slowdown. Some sellers are now prepared to accept a lower price and move on for a fresh start in 2023. At the same time, many cash buyers have sold assets and are searching for bargains. These cash buyers will support the housing market during this period. If prices drop by 10%-15%, cash buyers are expected to increase. This could help stabilise and settle the market.”
Original Source of Content Credit: Financial Reporter
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