UK House Prices Fall

by | Monday 7th Nov 2022 | Mortgage News

As predicted by us here at Oportfolio and by economists and property finance specialists, the UK has seen house prices fall significantly in the last month. This drop in prices comes after the disastrous announcement of the ‘mini-budget’ last month by the former chancellor of the exchequer. The value of property in the UK has been going up and up consistently over the last few years and a mini property boom occurred after the pandemic as people decided that they would like to move from the house that they had been isolating in, to another bigger property.

But limited property stock has caused a large disparity between first-time buyers and second time buyers and portfolio landlords in recent times and competition for property has gone crazy with multiple people bidding and battling to buy one property. But, after the government released plans to cut taxes in their mini-budget and the Bank of England increased interest rates, forcing the hand of mortgage lenders to increase their own mortgage rates, people have started to steer away from buying property for the time being and are favouring renting or living with family until rates come back down.

This means that the amount of people bidding for property has decreased and the over inflated property prices caused by the previous competition to buy has already started to take a hit and it is clear that property is coming down.

UK House Prices In October 2022

Mortgage lender Halifax have released some figures today in their lates house price index that show the sharpest property price decrease in over 18 months. A drop of 0.4%. The average UK house price is now £292,598. Down from £293,773. As already mentioned, Halifax attribute this to a decrease in the interest of potential home buyers after mortgage interest rates increased and as the UK economy battles a cost-of-living crisis. In July and September 2022, there was a property price decrease of 0.1% and a 0.3% property price increase in August 2022. Despite this drop however, Halifax have pointed out that property prices were still 8.3% higher on average than October 2021.

Despite pretty much every area of England seeing a drop in prices, the West Midlands has the joint highest annual growth of any UK region at 11.7%. This is perhaps because of the imminent completion of the HS2 high-speed railway system which is coming to Birmingham in the next few years. The addition of the new high-speed railway will mean that people can travel from Birmingham to London in 52 minutes, encouraging former would be buyers in London to move to the West Midlands city and its surrounding areas.

What Do The Mortgage Experts Say?

Content and communications manager at Oportfolio Mortgages Louis Mason had this to say:

“We predicted that this would probably happen sooner rather than later. Property prices have been so overinflated for such a long time, it was only a matter of time before they would start to come down again. A lot of us in the industry had been wondering when it would happen, but it looks like the mini-budget has been the catalyst for change. I don’t think that property will drop to incredibly low levels but will more than likely drop to an average of around £250,000 to £270,000 probably with London and the South pushing these figures up. 

But this does not mean that more first-time buyers will necessarily be snapping up the property as there is still the issue of the cost of living and high interest rates. Although we will do our best to help new borrowers to get the best and most competitive mortgage products and rates, it will still be difficult for buyers to save the necessary deposit that lenders need and changes to mortgage affordability will penalise borrowers with lower income unfortunately for the time being. This is likely to continue until inflation and interest rates come down.”

If you or anyone you know is interested or concerned about property prices dropping, please feel free to give our property advisors a call today to talk things through with an expert.

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If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

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