UK house prices rise for the second consecutive month: Halifax

House prices have continued to rally as the year draws to a close with a +0.5% rise recorded in November, following a rise of +1.2% in October.

Related topics:  Property,  House Prices,  Halifax
Property | Reporter
7th December 2023
Halifax 834
"The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand"
- Kim Kinnaird - Halifax

The latest data and analysis from Halifax has revealed that UK house prices have seen their second monthly rise on the bounce - up by 0.5% in November, with the price of a typical UK home now standing at £283,615, around £1,300 more than last month.

Nations and regions' house prices

Northern Ireland is the strongest performing nation or region in the UK, with house prices increasing by +2.3% on an annual basis. Properties in Northern Ireland now cost on average £189,684, which is £4,294 higher than at the same time last year.

House prices in Scotland also continue to show resilience, though growth has flattened over the last year (0.0%), with the average property in the country now costing £203,116.

Wales recorded one of the lowest annual falls (-1.5%), with homes selling for an average of £215,787 in November.

At the other end of the scale, property prices in the South East fell most sharply when compared to other UK regions over the last year (-5.7%) to £373,943, a drop of -£22,702.

London retains the top spot for the highest average house price in the UK, at £524,592, though prices in the capital have now fallen by -3.8% on an annual basis.

Kim Kinnaird, Director, Halifax Mortgages, said: “UK house prices rose for the second month in a row, up by +0.5% in November or £1,394 in cash terms, with the average house price now sitting at £283,615. Over the last year, despite the wider economic headwinds, property prices have held up better than expected, falling by a relatively modest -1.0% on an annual basis, and still some £40,000 above pre-pandemic levels.

“The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand. That said, recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely a result of an improving picture of affordability for homebuyers.

"With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases.

“However, the economic conditions remain uncertain, making it hard to assess the extent to which market activity will be maintained. Other pressures – like inflation, the broader cost of living, overall employment rates and affordability – mean we expect to see downward pressure on house prices into next year.”

Tom Bill, head of UK residential research at Knight Frank, said: “The fact inflation has fallen below 5% is better news for the UK property market than the positive house price readings of the last two months.

"The jury is still out on the sustainability of recent rises in such a thin market, but if we are not at the bottom of the current housing market slowdown, we must be close. The key is that sentiment has become more buoyant in recent weeks as the economic data improves and keeps downward pressure on mortgage rates.

"Transactions numbers, which are a better indicator for the overall health of the market than prices, should be stronger in the next six months than the last six provided a general election is not called in the first half of 2024. As the economic backdrop improves, the political temperature is rising, which is likely to be the biggest risk faced by the UK housing market over the next 12 months.”

Nathan Emerson CEO at Propertymark comments: “There is little hiding away from the fact that 2023 has been a complex and challenging year for the housing market. The market has grappled with both high inflation and elevated interest rates and this unfavourable combination has brought a far more cautious approach from both buyers and sellers alike.

"Propertymark remains optimistic that 2024 will bring a more positive outlook, with inflation hopefully continuing to drop and household earnings gathering greater momentum. However, we must remain vigilant, as recovery sometimes comes with unexpected challenges along the way.

"It’s important to realise that while some geographical areas are starting to gain traction once again, for an overall healthy property market it would be preferable to see this universally across the entire UK before we can be confidently reassured.”

Anna Clare Harper, CEO of GreenResi, says: "The average house price is 1 per cent below this time last year.

"Softer pricing is not a surprise, as higher interest rates have a much more significant impact on the affordability of owning a home than house prices.

"The impact of higher rates is starting to be felt, in particular by the group of 2 million property owners with variable rates or fixed-rate terms coming to an end this year, who are starting to feel the pinch.

"Across the housing market, demand is down. However, supply is also limited, which is why house prices haven’t fallen more dramatically.

"That said, there are good deals to be had. Investors are picking up opportunities in low-risk, high-growth areas where the gap between asking prices and offers accepted (the bid-ask spread) is widest because vendors need to sell - through auction, online portals or through contacts.’

Gareth Lewis, managing director of property lender MT Finance, says: "There is nothing out of the ordinary in this latest data but signs of ‘business as usual’ for the market.

"While there is a slight uptick in prices this shouldn't be regarded through rose-tinted glasses, as while transactional volumes remain low, we are possibly not seeing the true reflection that increased rates and the cost of living are having on what buyers are willing to pay. We can already see a reasonable downward trend being set in the South East, with regional fluctuations becoming more relevant as we move forwards."

Alex Lyle, director of Richmond estate agency Antony Roberts, says: "Despite plenty of distractions at this time of year, there are serious buyers out there who are keen to transact at the right price. There is still competition but not much stock, as you would expect in the run-up to Christmas, with many would-be sellers choosing to hold off coming to market until the spring.

"The market is showing gentle signs of picking up and is more stable than it was six months ago with the pause in interest rate rises having a positive impact. As the inflation figures continue to be encouraging, it is unlikely that the Bank will have to raise rates again which is having a positive market sentiment on market sentiment."

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "While lenders are on the lookout for potential headwinds which might impact mortgage pricing, they are much more confident than they have been in recent months. There is much less volatility in the cost of funds with Swaps, which underpin the pricing of fixed-rate mortgages, continuing to edge downwards amid speculation that the base rate has peaked and the next move will be a reduction.

"With five-year Swaps dipping below 4 per cent, taking them back to a little higher than they were this time last year, the direction of travel for fixed-rate mortgages continues to be downwards. Although borrowers need to get used to living in a higher-rate environment, with the days of sub-1 per cent mortgages long gone, two- and five-year fixes are now available from less than 4.5 per cent, which is starting to feel more palatable."

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