This is according to the latest Halifax House Price Index, which revealed house prices tumbled by 2.3% in November and grew by just 4.7% over the year.
In October house prices were averaging £292,406 and had increased in value annually by 8.2% – so the data for November shows a marked change for the market.
House price growth slowed in all regions of the UK during November, with the exception of the North East of England where values increased annual by 10.5% (from +10.4% in October).
Kim Kinnaird, director of Halifax Mortgages, said this month’s fall reflected ‘the worst of the market volatility over recent months’.
She added: “Some potential home moves have been paused as homebuyers feel increased pressure on affordability and industry data continues to suggest that many buyers and sellers are taking stock while the market continues to stabilise.
“When thinking about the future for house prices, it is important to remember the context of the last few years, when we witnessed some of the biggest house price increases the market has ever seen.”
It’s a process of ‘normalisation’
Despite today’s fall in prices, Kinnaird explained they were still more than £12,000 higher than this time last year and well above pre-pandemic levels by more than £46,000.
She explained the market may be going through ‘a process of normalisation’. “While some important factors like the limited supply of properties for sale will remain,” she said, “the trajectory of mortgage rates, the robustness of household finances in the face of the rising cost of living, and how the economy – and more specifically the labour market – performs will be key in determining house prices changes in 2023.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said the news did not bode well for the property market.
“Things have officially gone from bad to worse in the property market, with the biggest monthly price drop since the financial crisis of 2008,” she said
“We’re not yet in the realms of annual price falls, but if this pace continues, it won’t be long until we are.”
Wider economic difficulties
A fall in house prices has been on the cards for some time, with experts predicting a combination of cost-of-living crisis and the fallout from the mini-Budget in September would speed up the inevitable comedown from the pandemic property boom.
Alice Haine, personal finance analyst at Bestinvest, was not surprised at the downturn. “With many first-time buyers now offering less for homes and more sellers reducing asking prices, Britain’s housing market is succumbing to the wider gloom affecting the economy following the dizzying price rises seen during the pandemic,” she said.
“Falling prices are to be expected when inflation is running at a 41-year high, borrowing costs are significantly more expensive than 12 months ago and workers are contending with falling real wages and the hit to job security that comes with a recession.”
