UK house prices fell last month at the fastest annual pace since June 2011, the latest Halifax Price Index reveals this morning.
Average house price fell by -0.1% in June, a third consecutive monthly decline while the annual rate of house price growth fell to -2.6%, from -1.1% in May
Typical UK property now costs £285,932 (vs peak of £293,992 last August)
New build prices were more resilient compared to existing homes while Southern England saw most downward pressure on property prices
Commenting on todays HPI, Mantra Group managing direct Nimesh Sanghrajka says: “There’s no doubt the property market has evolved from the ultra-low interest rate environment that so many had become accustomed to.
“But just because rates are rising doesn’t mean the property market has seized up. People still need to move, to buy and sell homes, so deals are being done and there’s liquidity available.
“A counter-balance to all the gloomy news about where mortgages are headed is a growing acceptance that this is going to be the new normal for the short term at the very least. That means that sellers are increasingly flexible – you could even say realistic – on asking prices as they accept the world has changed”.
Sanghrajka adds: “As always what the market wants is stability, and clearer signals about how far the Bank of England, and ultimately the Government, is prepared to go to rein in inflation would help deliver that.”
Together head of personal finance and intermediary sales James Briggs comments: “While the market is under pressure and there will undoubtedly be regional corrections, we are far from a crash.
“With the next update on inflation figures due this month, customer awareness of mortgage costs and the impact of high repayments is at an all-time high. Those with mortgages longer than 12 months are currently experiencing a significant payment shock and sadly, the market just won’t swing in their favour for the most part of this year”.
“However, that isn’t to say all activity is ceasing to exist. For those in a position to buy, whether for residential or non-residential properties – now is the time to strike and take advantage of bottom rate prices. “
MT Finance director Tomer Aboody, director of property lender MT Finance suggests the sentiment in the market is to keep a stiff upper lip, with buyers and sellers still out there, making the impact less volatile.
“Of course, the continued interest rate rises are impacting buyers, as people wait to see where the new norm settles, but we are not seeing the ‘crash’ that many were expecting because proportionately very few people are being affected by the rate hikes, since most are currently on fixed mortgages”.
Aboody adds: “Maybe it’s time for the Bank of England to let the market breathe and see how the rate increases actually make an impact before continuing to choke it.’
TML chief commercial officer Steve Griffiths argues that despite house prices falling at the fastest rate annually since June 2011, on a month on month basis they remain relatively steady, demonstrating somewhat surprising resilience against the gale force winds of the property market.
“This should generate a little more positivity from both buyers and sellers, who will feel reassured by this strength”.
Green Resi chief executive Anna Clare Harper comments: “The average house price was £285,932, down 2.6% according to Halifax, which is partly a market correction. Housing policy has focused on the needs of homeowners, and on debt to fund new supply, for a long time. With higher interest rates, price growth is being corrected. However, describing a shift in the market affecting millions of people as a ‘market correction’ misses the point”.
“We need to look beyond aggregated property prices at a point in time and consider the environmental and social realities and implications, just as professional investors are increasingly required by regulations to monitor and report on their Environmental Social and Governance (ESG) credentials, which in turn affect prices and values”.
Former Rics residential chairman and London estate agent Jeremy Leaf insists: “This slow puncture softening in house prices reinforces the message from other recent surveys that financial markets pricing in further interest rate increases is not helping buyer confidence.
“However, these figures are a little dated so don’t yet fully reflect the recent sharp increases in mortgage payments.
He adds: “On the ground, sales are still proceeding often to those who are not dependent on mortgage finance but they are taking longer and often involve protracted renegotiations resulting in modest, rather than large, price falls.’
SPF Private Clients chief executive Mark Harris points out that as mortgage rates continue to rise, there is growing appetite from borrowers for shorter-term fixes and penalty-free trackers in the hope that this volatility in the market will be relatively short-lived.
“It is no surprise that this is having a knock-on effect on house price growth as there is only so much borrowers relying on mortgages are able to pay, particularly those requiring relatively high loan-to-values.
He adds: “Those with more equity in their homes, who have benefited from low mortgage rates over the past few years, will be able to cope better perhaps with the new norm of higher rates but must still adapt accordingly by tightening their belts.
Antony Roberts estate agent director Alex Lyle says: “An ultra-ambitious price a year ago could well have been achieved but now that property could stick.
“That said, there is still lots of activity in the market and a fair amount of stock under offer, although chains are long and some deals are taking longer to go through than any parties would wish”.
He adds: “Those buyers who have been looking for an excuse to delay their purchase and wait until we have a clearer understanding of where rates are headed, are now doing so. Some vendors are taking a similar approach, sitting tight and waiting until the autumn in the hope that things will have settled down by then.”
