UK house prices suffer biggest monthly fall in 14 years

Annual rate of house price growth slowed to 4.7%, from 8.2% in October

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The price of the average house in Britain fell by 2.3 per cent in November, according to data from one of the country's largest financial services companies.

The latest Halifax House Price Index said a typical UK property now costs £285,579 ($346,800), down from £292,406 in October.

House prices fell by 0.4 per cent in October, meaning the average annual rate of growth has slowed from 8.2 per cent to 4.7 per cent.

“While a market slowdown was expected given the known economic headwinds, and following such extensive house price inflation over the last few years [up 19 per cent since March 2020], this month’s fall reflects the worst of the market volatility over recent months.” said Kim Kinnaird, director of Halifax mortgages.

“The monthly drop of minus 2.3 per cent is the largest seen since October 2008 and the third consecutive fall.”

North-east England bucks trend

Most regions across the UK experienced falls in house prices in November, with the exception of north-east England, where prices rose by 10.5 per cent, up from 10.4 per cent in October.

It is also now the only area of the UK where annual house price inflation is in double figures.

The growth of house prices slowed again in London in November. Prices have risen 5.2 per cent over the past 12 months, down from 6.6 per cent. The average price of a property in the UK capital in November was £549,160.

Properties in the window of an estate agents in the Mossley Hill area of Liverpool, north-west England. Bloomberg

The mortgage market in the UK is still recovering from the battering it took in September, following the radical economic agenda of former prime minister Liz Truss. The current cost of living crisis has also weighed heavily on the willingness of potential movers to enter the housing market.

“Britain's housing market is succumbing to the wider gloom affecting the economy following the dizzying price rises seen during the pandemic,” said Alice Haine, personal finance analyst at Bestinvest.

“The combined effects of double-digit inflation, alongside the UK's slow march into recession, is keeping many would-be first time buyers away from entering the market,” Emma Cox, managing director of Shawbrook Bank said.

While today's figures from the Halifax may seem dramatic, for many observers the UK housing market is in a period of self-correction, given the soaring price rises in the past few years.

“It's important that we view recent declines in context, as we are now merely starting to see a return back to pre-pandemic norms,” said James Forrester, managing director of Midlands-based estate agent Barrows and Forrester.

A happier New Year?

Expectations for the New Year are mixed. Last week, figures from the Bank of England showed the average interest rate for new mortgages had risen to 3.09 per cent, the highest since 2014. However, under normal circumstances, the first few months of a new year do see an increase in activity in the housing market.

“Our web stats show us that interest behind the scenes is still there. People are still looking at what's coming on and spending time searching for property but are clearly holding back. The question is whether the new year will see that traditional rush to market for both new buyers and sellers.” said Mark Manning, managing director of Northern Estate Agencies Group.

Updated: December 07, 2022, 11:33 AM