UK house prices expected to fall as mortgage rates soar
Rising mortgage costs and the broader cost of living crisis will push UK house prices down more sharply in the coming months, said Halifax, after prices dipped 0.1% in September.
Halifax said the market had been almost flat since June but was now heading into a more significant slowdown as rapidly rising borrowing costs made buying a property unaffordable for more people.
“The housing market may have already entered a more sustained period of slower growth,” said Kim Kinnaird, the director at Halifax Mortgages. “The prospect of interest rates continuing to rise sharply amid the cost of living squeeze, plus the impact in recent weeks of higher mortgage borrowing costs on affordability, are likely to exert more significant downward pressure on house prices in the months ahead.”
Earlier this week, the average five-year fixed-rate mortgage breached 6% for the first time in 12 years, while the average two-year fixed rate has passed the mark for the first time since 2008. Property experts have predicted that average house prices in the UK could fall by at least 10% next year.
About 1,000 deals have been pulled from the market in recent weeks after Kwasi Kwarteng’s mini-budget triggered a sell-off in financial markets and raised expectations for even higher interest rates.
Halifax said a typical UK property now costs £293,835 as the pace of annual growth slowed for the third month in row, from 11.4% in August to 9.9% in September, the first time it has dropped into single digits since January.
“There are hard times ahead and many people may have to downsize because they can’t afford the home they bought when interest rates were at rock-bottom,” said Tomer Aboody, a director of the property lender MT Finance.
Halifax said that Wales
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