Capital appreciation blow as landlords’ house values dip again

The latest monthly index from the Halifax shows average house prices falling 0.4 per cent in October, following the 0.1 per cent drop a month earlier.

The annual rate of growth has dropped to 8.3 per cent from 9.8 per cent and the typical UK property now costs £292,598 - down from £293,664 in September.

Regionally the rate of growth slowed in all but one part in England during October, with a similar slowing trend in Northern Ireland, Scotland, and Wales.

Kim Kinnaird, director of Halifax Mortgages, says: “Though the recent period of rapid house price inflation may now be at an end, it’s important to keep this is context, with average property prices rising more than £22,000 in the past 12 months, and by almost £60,000 (25.7 per cent) over the last three years, which is significant.

“While a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant shock as a result of the mini-budget which saw a sudden acceleration in mortgage rate increases. While it is likely that those rates have peaked for now – following the reversal of previously announced fiscal measures – it appears that recent events have encouraged those with existing mortgages to look at their options, and some would-be homebuyers to take a pause.

“Understandably we have also seen consumer caution grow, as industry data shows mortgage approvals and demand for borrowing declining. The rising cost of living coupled with already stretched mortgage affordability is expected to continue to weigh on activity levels. 

“With tax rises and spending cuts expected in the Autumn Statement, economic headwinds point to a much slower period for house prices.

“While certain longer-term, structural market factors which support higher house prices – like the shortage of available properties for sale – are likely to remain, how significantly prices might ultimately adjust will also be determined by the performance of the labour market.

“Currently joblessness remains historically low, but with growing expectations of the UK entering a recession, unemployment is expected to rise. Whilst it may not spike to the same extent as seen in previous downturns, history tells us that how this picture develops in the coming months will be a key determinant of house price performance into next year and beyond.”

Propertymark chief executive Nathan Emerson says: “The latest Halifax House Price Index continues to show a fall away in house prices which, alongside additional help from the new higher Stamp Duty threshold, will now see the purchasing power of first-time and other homebuyers improved.

“There are also more homes for sale coming to the market which is providing buyers with a greater choice. This will therefore mean they can be more level-headed with the offers they're putting forward which will naturally see a softening in prices being achieved over the next few months.”

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