Sluggish September sees house prices drift south

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, comments on the Halifax House Price Index for September, showing Sluggish September sees house prices drift south.

Key points from publication:

• • House prices fell 0.4% in September and are down 4.7% in the year to September.
  • The average house now costs £278,601, back to levels seen in early 2022, but still £39,400 above pre-pandemic levels.
  • They’re down £14,000 from the peak, but are still 1% higher than when the Bank of England started raising rates.
  • Prices are falling in all regions, but are dropping the most in Southern England, and are down 5.7% in the South East.

Sarah Coles says:

“A sluggish September saw house prices drift further south.

“Mortgage rates were starting to ease back from the peak a month earlier, but even by the end of the month were only back around the same levels as mid-June and still a significant step up from the spring.

“We’re still sitting on huge house prices gains since the onset of the pandemic, but even while mortgage rates are falling, prices may have further to drop.

“There is some good news for sellers, because the market has been incredibly resilient, and despite the shifts in mortgage rates since the Bank of England started hiking rates, house prices have only fallen 1%. 

“There’s good news for buyers too, because mortgage rates continue to fall.

“The average five-year rate is back below 6% (5.97%), and the average two-year rate is back at 6.43%, according to Moneyfacts.

“However, given that in April the average five-year rate was below 5% and the average two year-rate below 5.5%, we’re still facing a much harsher climate for buyers.

“Despite holding rates, the Bank of England has indicated they will be higher for longer, so there’s no prospect of bigger cuts in the near future.

“It means we may well see both mortgage rates and prices drift further down from here, but we’re not expecting any dramatic shifts in either for now.

“Some buyers will be keen to move anyway.

“The housing market isn’t somewhere you can move fast, so it’s not easy to time the market.

“Plus, your home is first and foremost somewhere to live, so if you’ve found an affordable property you love and want to stay for the long-term, there’s no reason to be stuck somewhere you’re unhappy – or that’s costing you a fortune in rent.

“Others will want to bide their time, convinced that house prices and mortgage rates are both on their way down, so their patience will be rewarded.

“If you’re sitting on a deposit, make sure it’s working as hard as possible for you.

“You may not want to tie it up in a fixed rate account if you’re not sure when you want to buy; however, it’s worth shopping around for a competitive easy access account.

“All easy access savings are losing spending power after inflation at the moment, but with the most competitive rates up at 5.2%, and inflation likely to fall from 6.7%, this might not be the case for much longer.”

Kindly shared by Hargreaves Lansdown