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Halifax House Price Index Sept 22

ended 06. October 2022

On Friday morning at sparrow's fart (07:00) we're getting the September Halifax House Price Index. So a few questions for you. Answer any or all of them but please don't write an essay. Any other thoughts, as ever jot them down.

  • With interest (and mortgage) rates almost certainly set to rise higher, potentially a lot higher, are house prices going to fall, or will the lack of supply mean we're more likely to see a reduced rate of growth, or a flatline?
  • Do you think we're going to see a rise in the number of people downsizing, or even forced sales, as highly leveraged borrowers come to the end of their crazily low fixed rates and find themselves staring down the barrel of a 5%+ mortgage?
  • What about all these predictions from certain economists that we could see prices drop by 20%+. Are they spouting gibberish?
  • What do you see happening to the property market between now and Crimbo? Is demand going to drop off as people sit on their hands amid all the economic uncertainty?
  • Will the new stamp duty regime make any difference to demand?
  • How hard is it for a first-time buyer to get onto the ladder now compared to a few months ago?
  • Are you seeing more interest from overseas buyers given that Sterling has about as much value as a sherbert lemon?
  • Is it a buyer's market, or a seller's market? I know a lot of you disagree on this one.
  • Would you rather have hands the size of legs, or legs the size of hands? Please explain why.

6 responses from the Newspage community

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Rob Peters
Principal at Simple Fast Mortgage
Many people who owned before the Global Financial Crisis have seen interest rates at this level before, and rates of circa 5% were the norm. What has never been the norm, however, is having interest rates rocket upward at the speed they have in the past two months. It's unprecedented. Massive change creates shock in the markets and that is what we are seeing now, both from lenders who have withdrawn their products, and buyers who are panic-stricken. It's almost certain there will be a house price correction, but it's still not clear by how much.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Given we may have two further rate rises before the year is out, I think the purchase market will slow down in the run-up to Christmas, perhaps significantly. Recent economic and political events have shocked a lot of people and it will take time to regain their confidence. It will switch to a buyers' market assuming borrowers can stomach the rate rises, and those with little or no chain will be in pole position.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
With the typical 2-year fixed rate mortgage now over 6%, it's obvious this is going to have an effect on the property market. Many are now predicting house price declines of 10% next year, but this is a serious drop and unlikely given the lack of supply. We still have a massive shortage of houses in the UK and that will support prices. The Prime Minister is trying to do something about housing, and her reforms to supply side economics will involve making it easier for house builders to obtain planning and get shovels in the ground. She also signalled help for first-time buys with a massive cut to stamp duty for them, and a significant reduction for everyone else. Admittedly, the response to the budget from the markets didn't help anyone, with borrowing rates going through the roof. In fact, this wiped out any benefit that stamp duty cut gave people. With rates at this level, and the base rate likely to rise by over 1% next month, buyers and sellers will dry up and transaction levels will fall off a cliff. What happens in the first quarter of 2023 will be interesting. Mortgage interest rates may have settled down by then, and inflation should have started coming down too. This could signal more normal times for the housing market and we could stave off a crash. This will also depend on how hard the economy is hit overall and the depth and length of the the recession we are almost certainly entering into.
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Mike Staton
Director at Staton Mortgages
This week, I drove past seven For Sale signs and only three of them were sold. This is worrying and could be seen as the first sign of a housing market crash. Hopefully we will not end up with one but it's now starting to appear a very realistic possibility. This is especially the case when this week we saw one lender change applicants' interest rates mid-way through their application, meaning that even the submission of an application isn't protecting people from interest rate increases, even after they have paid reservation and product fees. With both of these factors in mind, it's hard to see prices going anywhere but south, or staying flat at best.
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Graham Cox
Director at Bridging Hub
The property market has undergone a seismic shift in the past couple of weeks. Borrowing has got a lot more expensive for lenders, and they are passing on those costs to home buyers. Even though the Bank of England base rate is still only 2.25%, mortgage rates are now at least double that in most cases, often 5% plus. Unless the government steps in yet again, I think there will be a flood of forced sellers very soon, as homeowners realise just how much mortgage payments will be going up and panic sets in. At this point, I only see house prices falling significantly in 2023 and beyond.
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Rob Gill
Managing Director at Altura Mortgage Finance
The big concern for the property market is whether rocketing mortgage rates will trigger a buyers' strike. Will those looking to buy a home when mortgage rates were 3%-4% two weeks ago still be prepared to do so at 5%-6% where rates are now? If too many conclude the answer is 'No', then a significant fall in house prices cannot be ruled out.