With the value of living crisis and forecasts of a UK recession, questions have began to swirl around whether or not UK house prices could crash. Record inflation degrees have seen consumers cut back on spending, while the Bank of England has made loan payments greater high-priced by elevating interest costs. While belongings expenses have risen steeply because the Covid-19 pandemic, Rightmove’s House Price Index (HPI) posted in mid-August observed that they’d fallen lower back slightly (even though this was defined as ordinary throughout year).
Now, excessive road bank brand Halifax has launched the latest version of its personal pretty reputable HPI. So what does this house rate index display – and are prices going down?
What is the Halifax HPI?
The Halifax HPI is a property rate index that has been analysing UK house expenses on a monthly basis since January 1983. It measures the market by looking at loan offers. The bank is responsible for 15% to 20% of the UK loan market. It method the Halifax HPI is a superb measure of house prices as they appear later on in the buying process – even though it doesn’t always suggest the offers tracked have long gone directly to be completed. Some indices – like Rightmove’s – look at asking rate data, which has a tendency to reflect supplier sentiments as they presently are however does not show how far above or under the asking rate the residences are actually bought for.
Others examine land registry data, which exhibits the real rate the property bought for and correctly tracks how a whole lot interest there was in the belongings marketplace, however has a tendency to be much less up-to-date.
What does August Halifax HPI show?
On 7 September, Halifax discovered its HPI for the month of August 2022. The headline discern was that house prices improved 0.4% in August in comparison to July (once they fell lower back marginally by 0.1%). On an annual and quarterly basis, there has been a slowdown in property rate growth. Prices had been 11.5% better than in August 2021, however in July they had been 11.8% up.
But this still means the common rate has reached a record high of £294,260. Wales noticed the biggest amount of house price inflation, with expenses leaping 16.1% year-on-year – the best charge of inflation when you consider that 2005. It method expenses in the state have long gone up by £31,246 to £224,858 on common.
Scotland’s annual inflation charge slowed from 9.5% to 9.4%. Meanwhile, in London, expenses went up 8.8% (£44,669) – the strongest growth recorded in the capital when you consider that 2016. Halifax says the average property there now costs £554,718.
In short, house prices aren’t taking place but however ought to nicely do in the coming months – albeit from document highs. Kim Kinnaird, director of Halifax Mortgages, stated that regardless of the obvious resilience of the housing marketplace, there had been “cooling expectations” throughout the sector.
“Firstly, there’s the substantial hit to people’s earning from the cost-of-living squeeze. The 80% upward thrust in the energy rate cap for October will put greater stress on family finances, as will the similarly will increase expected for January and April,” she stated. “At the levels being predicted, this is likely to constrain the amounts that prospective homebuyers can afford to borrow, on top of the adverse effect of higher energy prices at the wider economy.”
“While government policy intervention may counter some of these impacts, borrowing costs are also possibly to maintain to rise, as the Bank of England is extensively predicted to maintain raising interest rates into subsequent year.” She added: “With house price to earnings affordability ratios already historically excessive, a greater tough duration for house prices should be predicted.
“However, this ought to be considered in the context of the exceptional growth witnessed in recent years, with common house prices having increased by greater than £30,000 over the last one year alone.”