UK housing market continued to slow in November as house prices decreased for a third month in a row and at the steepest rate in over 14 years, suggesting increased market volatility as households reel under the pressures of a cost of living crisis and an economic recession.
The house price index dropped 2.3 percent month-on-month, which was the biggest fall since October 2008, survey results from the Lloyds Bank unit Halifax and S&P Global showed Wednesday.
Economists were looking for a modest 0.2 percent decline in the Halifax house price index.
The annual rate of growth in house price nearly halved to 4.7 percent from 8.2 percent in October.
The average property price dropped to GBP 285,579 in November from GBP 292,406 in the previous month.
“The market may now be going through a process of normalization,” Kim Kinnaird, director at Halifax Mortgages, said.
“While some important factors like the limited supply of properties for sale will remain, the trajectory of mortgage rates, the robustness of household finances in the face of the rising cost of living, and how the economy – and more specifically the labor market – performs will be key in determining house prices changes in 2023.”
Homebuyers continued to reassess affordability amid tighter household finances and hence, paused some potential home moves. On the industry side, buyers and sellers are apparently taking stock as the market stabilizes.
Property prices remained more than GBP 12,000 compared to the same time last year, and were well above pre-pandemic levels, up GBP 46,403 versus March 2020, Halifax said.
Most regions witnessed a slowing in the annual house price inflation in November, reflecting the slowing property market.
In London, the pace of annual property price inflation slowed and the region continued to lag the others. That said, the average property price in the capital remained well above the UK average at GBP 549,160.
London house prices rose 5.2 percent annually in November following a 6.6 percent increase in the previous month.
While official figures showed an increase in home sales and mortgage approvals in October, the recent survey by the Royal Institution of Chartered Surveyors’, or RICS, signaled a continued downward trend in market conditions.
The RICS residential market survey showed that new buyer enquiries fell for a sixth month in a row in October and, gave weaker outcomes for agreed sales and new instructions.