Interactive Investor

Conflicting views on UK housing market

7th March 2023 07:41

by Myron Jobson from interactive investor

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The latest Halifax House Price Index report paints a different picture of the property market to Nationwide’s assessment, but the downward trend remains evident.

London home house 600

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Halifax’s latest house price index reports a different picture of the property market in February to Nationwide’s assessment also released recently. Whereas Nationwide saw the biggest annual fall in house prices in over a decade last month, Halifax has on the other hand seen a 2.1% increase in the annual rate of house price growth.

“The conflicting assessments is symptomatic of a hiccupping market that is adjusting to a comedown from the blistering pace of house price growth over the past few years. One thing that both reports agree on is the underlying house market activity continues to indicate a general downward trend.

“The recent fall in mortgage rates, with lenders seemingly engaged in a mortgage price war, and a strong labour market, with unemployment at a near record low, has helped keep prices elevated. But there is mounting evidence that the housing market is seemingly in a pendulum moment — swinging back in a buyers' market direction.

“Home inventory is starting to increase and sellers are accepting huge discounts on asking prices, £14,000 on average - according to Halifax’s recent study of the property market since the start of the Covid pandemic - to get sales over the line as the property market cools down.

“But the affordability crunch from rampant inflation and high mortgage rates, which in some cases are more than double than what they were this time last year, means buyers are not exactly celebrating. Many first-time buyers will remain in the sidelines until they are a bit more comfortable financially to buy, while existing homeowners could stay put in their current home and could shift their focus on remodelling or extending their property instead.

“Spring, typically a busy season for the UK's property market, will provide the real acid test for the robustness of house prices.”

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