The average UK house price now sits at £285,932 after a 2.6% decline since June 2022- equating to an average of £7,500 lost. This is the largest fall in house prices since 2011 and follows warnings that mortgage rates could reach 7%- leading to more market uncertainty.
“The housing market remains sensitive to volatility in borrowing costs,” said Kim Kinnaird, the director of Halifax Mortgages. “Concerns about persistent inflation have led to a significant increase in the cost of funding. The resulting squeeze on affordability will inevitably act as a brake on demand, as buyers consider what they can realistically afford to offer.
“How deep or persistent the downturn in house prices will be remains hard to predict. With markets now forecasting a peak in Bank Rate of over 6%, the likelihood is that mortgage rates will remain higher for longer, and the squeeze on household finances will continue to put downward pressure on house prices over the coming year.”
The average 2-year fixed mortgage rate in the UK is now more than 6.5%:
Garrington Property Finders chief executive Jonathan Hopper said: “The surging cost of mortgages is having a chilling effect – but the impact is greatest on the number of homes being sold, rather the prices people are paying for them.
“Nevertheless, pricing behaviour is shifting. Some forward-thinking sellers are cutting their asking price pre-emptively to get ahead of the market, rather than slicing thousands off in response to a low offer. For many, this will be a bitter pill to swallow, albeit one that is preferable to the limbo of having their home sit unsold for months before they cut the price anyway.”
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