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UK house prices fall at fastest rate in 14 years, says Halifax

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UK 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 homebuyers.

Data published on Wednesday by mortgage provider Halifax showed that average house prices declined 2.3 per cent between October and November.

That was the largest monthly drop since October 2008, the third-largest single-month decline in the index’s 40-year history, and follows a 0.4 per cent drop in 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.

Andrew Wishart, senior property economist at the consultancy Capital Economics, said: “It seems the 2022-23 house price correction has begun far more abruptly than that in 1989-90 or 2007-08, reflecting the sheer scale and pace of the mortgage rate shock.”

The typical property price fell to £285,579 in November, down 2.9 per cent from £293,992 in August this year.

Kim Kinnaird, director at Halifax Mortgages, said “some potential home moves have been paused as homebuyers feel increased pressure on affordability”.

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.

Kinnaird said the fall also 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 Covid-19 pandemic.

Line chart of £’000 showing UK average house price has fallen sharply in November

Mortgage provider Nationwide last week reported the largest monthly fall in house prices since June 2020.

According to Halifax, the rate of annual price growth slowed in all but one region, the North East, in November. 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 that previous drivers of the market, such as a desire for more space and heightened demand for rural living, are now receding, the mortgage provider 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.”

London continued to lag behind other regions and nations; its annual pace slowed by 1.4 percentage points to 5.2 per cent in November. House prices in Northern Ireland eased by a smaller 0.6 percentage point to 9.1 per cent.

Tom Bill, head of UK residential research at estate agent Knight Frank, said he expected house prices to fall back to the level they were at in summer 2021, erasing about half of the gain made during the pandemic.

Wishart at Capital Economics said he had previously anticipated UK house prices declining 12 per cent by mid-2024 but that he now thought this could prove “optimistic”. He added that he now expected London and the south of England to experience “the largest falls in house prices, while Scotland and Northern Ireland may prove most resilient”.

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