House prices have fallen for a third consecutive month and at the fastest pace since the 2008 financial crisis as rising borrowing costs squeezed prospective home buyers.
Data published by mortgage provider Halifax showed average house prices declined 2.3 per cent between October and November. That was the largest monthly dip since October 2008, the third-largest single month decline in the index’s 40-year history, and follows a 0.4 per cent drop between September and October and a 0.1 per cent fall between August and September. The annual rate of house price growth slowed to 4.7 per cent, down from 8.2 per cent in the previous month and the slowest pace since July 2020. Mortgage rates have surged in the past few months, reflecting expectations of higher medium-term borrowing costs, as the Bank of England contends with inflation running at a 41-year high.
Market expectations of further interest rate rises also jumped after then chancellor Kwasi Kwarteng’s “mini” Budget, which contained £45bn of unfunded tax cuts, but they have now returned to pre-September 23 levels. The fall reflected a “process of normalisation” after some of the “biggest house price increases” ever over the past couple of years. In August this year, the average house price was up 23 per cent compared with January 2020, before the onset of the pandemic.
Mortgage provider Nationwide last week reported the largest monthly fall in house prices since June 2020. Halifax said the rate of annual price growth slowed in all but one region, the North East, in November. Both Wales and the South West registered the sharpest annual slowdown, from 11.5 per cent to 7.9 per cent and from 10.7 per cent to 8.4 per cent respectively.
Both areas were key hotspots of house price inflation during the pandemic, suggesting previous drivers of the market, such as a desire for more space and heightened demand for rural living, were receding, Halifax said. Jonathan Hopper, chief executive of buying agency Garrington Property Finders, said: “The post-pandemic days of soaring prices and the ‘race for space’ as professionals snapped up homes in the middle of nowhere are over.”