Halifax HPI: Third price fall in four months as confidence drains

In October, prices were down 0.4% in a month to an average of £292,598. This is the third drop in four months. It’s also the biggest since February 2021.

Average prices have fallen £1,394 in the previous two months – although they’re still up £22,000 in a year. Annual price rises slowed again, to 8.3%. This has shrunk from the peak of 12.5% in June.

The Halifax House Price Index for October was released today: october-2022-halifax-house-price-index.pdf

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown: “Mini-budget mayhem exacerbated house price misery, with prices dropping faster than they have  in over 18 months. And with recession looming, there’s every sign that confidence is draining from the market.

“House prices have fallen for three months out of the past four. The housing market doesn’t always move in a straight line, but clearly a downward trend is developing.  We’re not getting near the realms of price falls yet, with annual growth still at 8.3%, but given it has fallen back from a peak of 12.5% in June, it would be foolish to rule out significant annual price drops in the coming months.

“While mortgage rates have eased very slightly as mini-budget measures were rolled back and Trussenomics was consigned to history, the chaos has taken a toll. It’s not just that rates are now higher, but buyers have had an unsettling shock, which could have a long-lasting impact on their willingness to take the plunge. RICS figures show buyer demand is sliding, and the Bank of England reported that mortgage approvals have fallen. Things are likely to feel even dicier now that the Bank has issued such a dire warning of recession.

“It says we’re set for a miserable period throughout next year and the first half of 2024. GDP is expected to fall about 0.75% during the second half of 2022, as higher energy prices put the squeeze on our disposable income. It’s then expected to keep falling through 2023, and the first half of 2024. Meanwhile wages will fall 0.25% behind rising prices this year and 1.5% in 2023, and the unemployment rate is forecast to hit 5.9% at the end of 2024 and 6.4% by the end of 2025 – up from 3.5% in the three months to August. It’s no wonder that people are bound to be considering whether now is such a great time to be stretching their finances and buying a new home.

“Of course, the lag in the sales process means we may not see significant falls for a while, and the annual figure may remain positive for months. But it’s increasingly difficult to look ahead and not see a housing market correction as we go into 2023.”