Halifax HPI: Miserable December as the rot sets in

In December, prices were down 1.5% in a month to an average of £281,272. This is the fourth consecutive month of falls. Annual price rises slowed again, to 2%.

Average prices are still £5,383 higher than this time last year, but are now down £12,720 from the peak in August. Halifax predicts prices will drop 8% this year.

The Halifax House Price Index for December was released today: december-2022-house-price-index.pdf (halifax.co.uk)

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “It was a miserable December for house prices, as the rot set in, and prices slumped again. We saw a fourth consecutive monthly price drop, and average prices are now up just over £5,000 in a year. While this month’s fall was less spectacular than November, it was more comprehensive – as prices fell in every region across the UK. This is a world away from June when they were up 12.5% in a year.

“The typical three-month lag between agreeing a sale and completion means this reflects buyer confidence in September, which only included a single week after the mini-budget. A major chunk of these sales were based on mortgages that had already been approved, so the chaos unleashed in the mortgage market by Kwasi Kwarteng’s announcement won’t necessarily have personally affected these buyers. It means this price drop is a product of the gradual easing of enthusiasm for property at the start of the month, and the collapse of confidence in the final week.

“Mortgage rates have gradually dropped back from the highs in the aftermath of the mini-budget, but remain significantly higher than before the chaos kicked off, and the shock of the hikes has taken a toll.

“Overwhelmingly indicators point to more decline for the market in the coming months. RICS figures show buyer demand fell for the seventh consecutive month, the Bank of England figures show mortgage approvals for the coming months fell by a fifth in November, and Zoopla says the average discount being accepted on asking prices has widened to 4%.

“As prices continue to drop back each month, it persuades more buyers to back away, and it’s only a matter of time before we start to see this translate into annual price drops. How fast and how far they fall will depend to an enormous extent on the wider economic picture, and how deep the recession turns out to be. However, with Halifax predicting declines of 8% this year, we can be fairly certain things aren’t going to be pretty.”