House prices fell in November: the days of double-digit house price rises are numbered

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on latest ONS House Price Index and Land Registry data for November, showing that house prices fell in November and the days of double-digit house price rises are numbered.

Key points from publications:

• • House prices fell 0.3% between October and November. 
  • Average house prices were up 10.3% in the year to November.
  • This is down from 12.6% in October, and backs further away from the peak of 14.8% in the year to July.
  • The average house price hit £295,000: £28,000 higher than a year earlier, but down slightly from October’s record high of £296,000.
  • London house prices hit £542,000, but are up just 6.3% in a year

Sarah Coles says:

“House prices dropped between October and November, and while they were still up 10.3% in a year, there’s every sign that the days of double-digit house price rises are numbered.

“Unfortunately, this is just the overture to the depressing dirge the market will be dancing to in the months to come.

“Sales typically take around three months to complete, but at the moment they’re taking closer to four months. It means November’s sales reflect how the market was looking in late August and September. The vast majority of this period was before all hell broke loose on the mortgage market after the mini-budget on 23 September.

“However, already buyers were starting to get cold feet. Inflation was running at 10.7%, and until the Energy Price Guarantee was announced on 8 September, we were also living with the horrible threat of another massive hike in energy prices in October.

“Meanwhile, we’d seen interest rates climb relentlessly for almost a year, and a combination of the two risked pushing monthly mortgage payments out of reach.

“Of course, since then, the market has taken a turn for the worse. Through October and November, the start of the sales process was seizing up, as the repercussions of the disastrous mini-budget reverberated through the market.

“Fixed mortgage rates surged in October, and while they started to fall in November, they were still above 6% for much of the month. It meant that in November mortgage approvals fell to their lowest level since June 2020.

“As a result, the RICS residential survey showed buyer demand falling for the seventh successive month, and prices beginning to pull back. It was the weakest measure for price growth since May 2020. 

“The shocking state of the market in October and November is likely to feed through into completion figures at the start of 2023 – at which stage house price growth is likely to slow significantly, and eventually turn negative.

“This is an incredibly difficult time to be making buying or selling decisions. If you take the plunge now, there’s a risk you may be over-stretching yourself for a property that’s likely to lose value. You may also be fixing yourself into a more expensive mortgage than you could get by holding off for a few months.

“However, if you hang on, it means staying somewhere you’re not happy, with no idea of how far or how fast either prices or mortgage rates will fall. Some people will want to wait to see where we are by the spring, while others will buy now – and use the opportunity to negotiate a chunky discount on the asking price.”

Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay