UK housing markets continue to cool after a strong period of growth during the pandemic.
The average house price fell 0.4% month-on-month to £292,598 (US$336,897) in October, its lowest level in five months. The drop was also the steepest since February 2021, according to a report released Monday by Halifax Mortgages, a national mortgage lender.
Compared to a year ago, the average house price was 8.3% higher. But the annual growth rate was noticeably slower than September’s 9.8%, according to the Halifax UK House Price Index.
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“While a post-pandemic slowdown was expected, there is no doubt that the housing market received a significant shock following the mini-budget which saw a sudden acceleration in mortgage rate hikes,” Kim said. Kinnaird, director of Halifax Mortgages, in the report.
“The rising cost of living coupled with already stretched mortgage affordability is expected to continue to weigh on activity levels,” she added.
Price appreciation slowed in all but one region – the North East – in England in October, and a similar slowing trend was also seen in Northern Ireland and Scotland, according to the report.
The slower rate of growth is also the result of a correction in prices from the highs reached during the pandemic, Ms Kinnaird said. A typical house in the UK has appreciated by £22,000 over the past 12 months, and nearly £60,000 over the past three years, she said.
Tom Bill, head of UK residential research at Knight Frank, agreed. “It’s a fair assumption that house prices have peaked after growing more than 20% during the pandemic,” he said.
But that doesn’t mean prices are now on a steeper downward trajectory, Bill pointed out. “After 13 years of ultra-low borrowing costs, anyone buying a home or paying it down will recognize that the ground has changed, which is why we expect prices to fall back to where they were at. summer 2021.”
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London’s Prime market, in particular, will remain resilient, said Matthew Thompson, head of sales at Chestertons. The London-based estate agent received the same volume of inquiries from potential buyers as in October 2021.
“It shows once again that, relative to the national picture, the London property market has its own pace and remains a key destination for buyers and investors,” he said.