UK house prices may decline by 8% this year: Halifax

UK HOUSE prices are on track to drop 8 per cent this year after four consecutive months of declines, said Halifax, one of the nation’s biggest mortgage lenders.

It said that its measure of property prices fell 1.5 per cent last month, after a decline of 2.4 per cent in November. The figures were similar to a reading from the Nationwide Building Society, which last week reported the longest slump in prices since 2008.

Soaring interest rates and a tightening cost-of-living squeeze are weighing on the property market. Halifax’s data showed that the average cost of a home was £281,272 (S$450,565), down 4.3 per cent from a peak of £293,992 in August.

Kim Kinnaird, director at Halifax Mortgages, said: “The housing market will continue to be impacted by the wider economic environment. As buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand.”

Prices over the whole of 2022 rose 2 per cent, reflecting gains in the first half of the year, when buyers were snapping up properties outside city centres for space to work from home.

Halifax said prices were now falling in every region of the UK. The north-east of England saw the biggest slowdown in the annual pace of growth, falling four percentage points in December to an annual growth of 6.5 per cent.

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Northern Ireland, which has also been a hot spot in recent months, cooled to 7.1 per cent from 9.1 per cent in November. In London, prices were up 2.9 per cent from a year ago in December, down from 5 per cent.

“These trends need to be viewed in the context of historic prices,” Kinnaird said. “The cost of the average home remains high – greater than it was at the start of 2022, and over 11 per cent more than house prices at the beginning of 2021.”

The Bank of England has increased its benchmark lending rate nine times since December 2021, putting it at 3.5 per cent, the highest since 2008. Investors anticipate that there will be hikes of another percentage point this year.

That has driven up mortgage rates, with the cost of an average two-year fixed-rate mortgage now at 5.79 per cent, and an average five-year one at 5.63 per cent, Moneyfacts data showed. 

The central bank said around four million UK households would have to shoulder a substantial increase in their mortgage rates in the next year. 

Property portal Rightmove said activity in the housing market spiked after Christmas, with a record number of new sellers putting homes up for sale on Dec 26. The number of people viewing the site also jumped. BLOOMBERG