Halifax House Price Index Nov 22

Prices are heading down due to inflation and rising interest rates and this trend will almost certainly continue throughout 2023. However, I would be surprised if average values dropped by more than 15% given that inflation is forecast to normalise by 2024. A fall in prices greater than 15% within a period of 12 months or seems historically unfathomable. Currently, many would-be buyers are waiting until 2023 for a bargain. December, and to a lesser extent November, have always been the month for cheeky offers, as there are fewer buyers ahead of the Christmas break. That's nothing unique to 2022. However the cliff edge of purchase activity and the burgeoning wave of landlords now looking to sell in the face of a barren outlook for buy-to-let, means more 'cheeky offers' are making a home run than in previous years. Buyers, for now at least, hold all the cards.

Amid all the uncertainty, buyers are currently sitting on their hands and adopting a wait and see approach. It's understandable given the turmoil since the mini-Budget and another interest rate decision due this month. This caution among buyers is forcing sellers, at least those who want to move quickly, to reduce their asking prices in order to secure a sale. We predict property prices will fall in the region of 2%-3% in Central London over the next 12 months but then expect them to start climbing up again once people have adapted to the higher cost of borrowing. That will take some time after mortgage rates have been so low for so long. Even with the cost of living crisis and the new higher cost of borrowing, there isn't enough property per buyer ratio so prices can only go one way once things settle, and that's up.

Prices are coming down but we're ignoring the overly negative predictions about house values. After all, if house prices fall 5%, all that means is your home is worth roughly what is was in January. If house prices fall 10%, all that means is you home is worth roughly what it was last summer. Conclusion: your home is still worth much more than it was three years ago, before the pandemic. We need some perspective around the property market and less hype. There is still a phenomenal lack of supply and that will support prices.

Scratch the surface and it's not the post-apocalyptic house market wasteland some would have you believe. Yes, we are shifting away from a world of 10% annual house price increases but that's probably a positive for normal people, and we'll likely see a rebalancing of the market by around 10% next year. Again this is probably good for normal people’s back pockets. Smaller mortgages are good for you after all. Also, for all the doom and gloom, the market goes quiet at Christmas or when England are at the World Cup. What it feels like at the coal face is that the normal end-of-year lull came early thanks to the uncertainty around the Autumn Statement but January is shaping up to be very brisk indeed.

Transactions are falling through the floor and whilst there will be bargains for buyers as motivated sellers are forced to sell at lower prices, these opportunities will be found in a tiny and limited pool. A multi-faceted housing market has emerged and is likely to stay as location, property type, tenure and even political bias have an impact. The reality is no one knows how far house prices can fall. A 25% drop would simple erase the inflated gains of the past few years, whereas anything higher than that would see transactions seize up like an old Austin Allegro engine. If unemployment rises and the cost of living crisis continues, the Government will have to step in and prevent mass repossessions, possibly even providing guarantee-backed subsidised mortgages via the banks in the same way they did bounce back loans.

We are not at the start of a free fall in property values. Prices are softening and it is the first time in a while where there are fewer buyers willing to outbid one another. Where the market will settle is pure guess work but prices will recover because there remains demand while lenders are signing the cheques.

Christmas has come early, and not in a good way. October's purchase business slowed, and November felt like a December, which is always a quieter time as focus shifts to Christmas in the economy. The house price indices are showing a clear reduction in values, but with the delays in completions, and six-month mortgage offers a lot of the deals completing now are not on the new normal rates, but from legacy mortgage offers. With properties continuing to be listed on Rightmove in decent numbers for this time of year, and demand for them falling, the perfect storm is forming for a serious readjustment in values, which only goes to amplify the desire to hold and wait from buyers. These indices will be a lot more interesting come late spring 2023.

The mini-Budget came at the worst time. Sales activity tends to drop towards the end of the year anyway, and the mini-Budget meant transactions dropped even more sharply. People are now making offers as low as possible to get the best deal. Unfortunately, I can't see much activity in December. However, estate agents will need to polish their negotiating skills for January as many buyers will offer 15% lower than the asking price. By then, sellers will be seriously reevaluating how much their house is worth in the market.

Everyone has checked out for Christmas. We’re seeing most people adopt a wait-and-see and let’s-look-seriously-in-January attitude. This has stopped the market in its tracks and it’s no wonder house price growth has slowed. Surveyors are cautious and down-valuations are becoming more common, which will trickle through to estate agents and cause price adjustments. This is not a bad thing, as house prices have been overinflated since the pandemic and to ensure first-time buyers have a chance of buying by the time they’re 37 — the average age of a first-time buyer — prices had to come down. January is going to be busy when all the festivities are over and people want a project for the New Year.

After the chaos, uncertainty and huge spike in mortgage rates caused by the infamous mini-Budget, it's no surprise at all that buyers have pulled back from the market. With markets only starting to calm down and mortgage rates falling in November, it's also no surprise that buyers are now putting off their search until after Christmas. The first proper Christmas people have been able to celebrate for three years, coupled with a winter World Cup in which England are playing well, people have every excuse to take a well-earned break and put off their property search until January.

A house price crash has already begun in my opinion. The ONS recently predicted a 9% fall in property prices over two years. And the rest. We're already a quarter of the way there in the past two months. There seems to be a lot of wishful thinking and self-delusion from vested interests, downplaying the severity of the falls coming. I think it's increasingly likely we'll see at least a 15% decrease in 2023 and 25%-30% over the next two to three years.

If unemployment gets out of control then we will see a major crash in house prices, and not the modest 10% predicted by most economists but probably closer to 25%-30%. So there is a big prize to smoothing out the inflation curve and making the cost of living crisis as bearable as possible. Our economy is pinned on a stable and buoyant property market, so although a crash may be good news for first-time buyers, overall it is bad news for the country as a whole. My own view is that the natural lull in December will be replaced with renewed activity in the market and a semblance of calm from lenders in terms of pricing. We're already starting to see that after the shock of the mini-Budget dissipates. And this will see buyers and sellers return to the market, albeit not in the volumes of previous years but enough to drive growth in the market and keep prices fairly static.

In my conversations with local estate agents, sellers still feel as it's 2021 and buyers feel that house prices have dropped 20% overnight, so there is a massive disconnect and some crazy offers being put forward. However, sellers have to realise the market has changed rapidly and they are no longer in a position to be demanding offers above asking price. Many buyers have put their plans on hold for the time being and with further base rate rises expected this month and next year, the market is going to be challenging until we have some stability surrounding inflation, the base rate and lender pricing. The Covid boom has gone and the 10%+ extra people paid over the past 18 months is very likely to be eroded next year, leaving many people in negative equity. I have recently had a client who offered £21,000 over asking price and, due to a long sale and having to replace their mortgage offer to a higher rate (costing £30,000 in interest over the next five years), they have now reduced their offer to £15,000 under the asking price.

Surely it's now a buyer's market? Are you seeing people demand big discounts off asking price? Are sellers proving stubborn or finally waking up and smelling the coffee? -Sellers are starting to get a bit cheeky. With the possibility of a house price crash, I have seen them still try to get 10% over the asking price. Buyers are happy to wait though. Why lose a sale for greed?! A lot of you said the mini-Budget killed activity in October and November stone dead. Will that continue into December as people watch crap movies and drink themselves blind? -No, people will be at home with less to do and phones to stare at. If you want to buy a house, it never gets out of your brain and rightmove will be swamped. Are you seeing more buyers (landlords, FTBs, homeowners) plan to hold out until next year when prices could be even lower, and fixed rates potentially come down (despite the fact, paradoxically, Bank Rate is likely to rise)? How far could house prices fall in your opinion? And why do you think this? Some reckon by as much as 30%, others say 5%. Say 75% and I can guarantee you media coverage (don't obviously). - Some landlords are waiting. Some landlords though are seeing the bigger picture. Buy now and you have the asset ready for when it can be utilised. Miss out on the asset now, and someone will snatch it up before you get the chance. The market hasnt stopped, its just slowed down while some people reassess. A lot of landlords are using this though, to get out there and get the choice of the cream. The jobs market is still strong for now, which will help support prices. But what if unemployment rises sharply next year as the Great Recession bites? -I dont see the recession being as bad as its made out. I think we will see a slight one, but people will carry on going. Self employment though will rise.