UK house prices up for first time in months: Halifax
UK HOUSE prices rose for the first time in seven months after a lack of properties for sale bolstered the value of the places that did change hands, a major mortgage lender said.
Halifax said property prices rose 1.1 per cent in October to £281,974 (S$470,700), which was also the biggest increase since February 2023. It confirmed a separate report last week from Nationwide Building Society, which also said prices rose last month, and bucked the trend towards weaker prices for much of this year.
Housing indicators have shown some signs of stabilisation in recent months, reducing the risk that the 10 per cent drop in prices that analysts expect will materialise. The market has slowed to a crawl since a surge in mortgage rates that has priced out many potential buyers, but the lack of places on the market has prevented a crash in valuations.
Housing transactions have stalled as affordability has become stretched and few homeowners are forced to sell up. Still-low unemployment and greater mortgage forbearance from lenders have reduced the numbers needing to sell despite high borrowing costs and a searing cost-of-living crisis.
“Prospective sellers appear to be taking a cautious attitude, leading to a low supply of homes for sale,” said Kim Kinnaird, director at Halifax Mortgages. “This is likely to have strengthened prices in the short-term, rather than prices being driven by buyer demand, which remains weak overall.”
Also supporting the market is a halt to the Bank of England’s spree of interest-rate hikes. That alleviated the upward march in mortgage rates, suggesting that the biggest pressure on the market may soon lift.
A NEWSLETTER FOR YOU
Tuesday, 12 pm
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
However, Kinnaird added that higher interest rates and wider pressures “continue to be challenges for buyers.”
Prices were down 3.2 per cent compared to a year earlier, a smaller fall than the 4.5 per cent annual drop seen in September. According to Halifax’s measure, valuations are down 4 per cent since the peak in August 2022.
House prices fell across the country on an annual basis, with a 6 per cent drop in South East England the largest of any region. The most resilient market was Scotland, where values fell just 0.2 per cent. London, where house prices are double the national average, posted a 4.6 per cent decline to £524,057 on average.
SEE ALSO
Halifax said the first-time buyer market held up in October with prices for these properties falling by less than in the wider market.
“The rise in the Halifax house price index in October confirmed that house prices are indeed rising, suggesting that the high cost of borrowing alone is not sufficient to trigger the leg down in house prices we predicted,” said Andrew Wishart, senior property economist at Capital Economics.
“While it would be unprecedented for a rise in mortgage costs of the scale we have seen not to result in house price falls, supportive labour market conditions and generous lender forbearance mean it is plausible.”
Data from mortgage lender Nationwide Building Society showed last week that house prices climbed unexpectedly by 0.9 per cent in October compared to the previous month. A survey by the Royal Institution of Chartered Surveyors also found new buyer enquiries and sales rebounding from recent lows.
However, activity is likely to remain subdued as borrowing costs for those buying or refinancing are still at well above levels before the BOE started hiking interest rates.
The average two-year fixed mortgage rate is still over 6 per cent, according to Moneyfacts. UK Finance estimates 800,000 fixed-rate deals were due to end in the second half of 2023 and double that number will expire next year. BLOOMBERG
Share with us your feedback on BT's products and services
