UK house prices set to fall as mortgage rates soar | Buying houses

Rising mortgage costs and the wider cost of living crisis will push UK house prices down more sharply in coming months, Halifax said, after prices fell 0.1% in September.

Halifax said the market had been roughly flat since June but was now heading for a more significant slowdown as soaring borrowing costs made buying a property unaffordable for more people.

“The housing market may already have entered a longer period of slower growth,” said Kim Kinnaird, director of Halifax Mortgages. “The prospect of interest rates continuing to rise sharply amid a cost-of-living squeeze, plus the impact of recent weeks of higher mortgage lending costs on affordability, is likely to put more significant downward pressure on house prices in the coming months.” .

Earlier this week, the average five-year fixed mortgage rate topped 6% for the first time in 12 years, while the average two-year fixed rate topped the mark for the first time since 2008. Real estate experts have predicted that the average home prices in the UK could fall by at least 10% next year.

About 1,000 deals have been pulled from the market in recent weeks after Kwasi Kwarteng’s mini-budget triggered a sell-off in financial markets and raised expectations of even higher interest rates.

Halifax said a typical UK property now costs £293,835 as the rate of annual growth slowed for a third consecutive month, from 11.4% in August to 9.9% in September, the first time it fell into single digits since January.

“There are tough times ahead and many people may have to downsize because they can’t afford the home they bought when interest rates were low,” said Tomer Aboody, director of property lender MT Finance.

Halifax said Wales remained the UK’s top performing region for growth, with the average house price up 14.8% to £224,490 compared to a year ago. However, the pace slowed from 15.8% in August.

London remained the worst performing region, with annual growth of 8.1%. However, the average house price of £553,849 is almost double the national average of £293,835.

“The events of recent weeks have led to greater economic uncertainty. However, in reality, house prices have been largely flat since June,” Kinnaird said. “Predicting what will happen next means understanding the many variables at play now, and the housing market has consistently defied expectations of late.”

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