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Halifax June 23 House Price Index

ended 06. July 2023

On Friday morning at 07:00, the Halifax June House Price Index is being published. As ever, it will get picked up widely in the local, national and trade media. A handful of Qs for you:

  • After the latest Bank of England rate rise, inflation stubborn and mortgage rates soaring, what next for house prices? A correction or crash?
  • And what happens if the base rate hits 6% or even higher? Could we see a rise in forced sales, as people come off ultra-low fixed rates?
  • How have activity levels been for you in June? How have buyers and sellers reacted to the events of the past month? Are people sitting tight?
  • What's happening on the ground generally, in your day-to-day interactions with clients?
  • Will the continued lack of supply and lack of new housing support house prices during a turbulent second half of the year?
  • How important is the resilience of the jobs market to house prices?

Any other thoughts, anecdotes or insights, send them across.

11 responses from the Newspage community

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Editor
Kate Allen
Owner at Finest Stays
The surge in available holiday homes in the South Hams, with most priced below the £1 million mark, is hard to miss, much like my stellar performance in today's school sports day parents race. Victory was oh so sweet, but the bitter taste of remortgaging at today's rates is enough to make even the best of us want to ditch the debt. And like a determined five year old in a sack race, asking prices for good properties in prime locations remain firm.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Asking prices are likely to drop over the coming months as many will choose to sell up rather than suffer the increased cost of home ownership. That said, demand and sales, whilst down on last year, remain 48% higher than pre-pandemic levels, the last "normal" market. There will be a growing number of forced sales, particularly among the more vulnerable mortgage prisoners, already struggling and with rates surging, tipping over the edge. June has been strong, with plenty of activity. This has mainly been remortgaging rather than purchases, with many looking for guidance on product selection. The jobs market remains strong, with a recent spike in vacancies showing that companies are gearing up for stronger activity, and unemployment remaining low. Bad news for inflation. It is only a matter of time before companies start to feel the interest rate pinch and embark on the inevitable cost-cutting.
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Riz Malik
Independent Financial Adviser at R3 Wealth
The labour market currently holds a crucial influence over UK's interest rates. Even as we pray for a drop in CPI inflation, the Bank of England equally desires a reduction in wage inflation. This may coincide with a surge in unemployment if the economy stalls. If the current trajectory is maintained, there exists a single term that could aptly portray the outlook for the UK, its housing market, and the mortgage industry: disastrous.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
As mortgage rates increase, homeowners on ultra-low fixed rates will face challenges when transitioning to new rates this year. This will lead to a rise in forced sales and in some cases, repossessions will follow as the stats show. The housing market's lack of supply and new housing developments has been an ongoing issue as we know. This scarcity will contribute to some level of resilience of house prices during these turbulent times but higher interest rates counteract those issues. The jobs market plays a vital role in supporting house prices. Stable employment and income levels provide confidence to buyers and help sustain demand in the housing market. Uncertainty of the nature that exists today requires landlords and home buyers to take a careful view of market dynamics and to be adaptable to these changing conditions.
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John Choong
Senior Equity Research Analyst at Investing Reviews
With the average fixed mortgage rate now firmly above 6%, the housing market should brace for an onslaught. Household incomes are getting squeezed by the month due to Andrew Bailey's complacency and incompetence. With a terminal rate of 7% rate now being priced in, mortgage rates could skyrocket to 8% or higher, potentially triggering a crash in the housing market. One of the few positives is that unemployment levels remain at healthy levels, while the household savings ratio remains above pre-pandemic levels. More importantly, over 70% of mortgages are held by the UK's top 40% of earners, thereby making defaults less likely. If inflation continues to remain sticky for the foreseeable future, the rapid tightening of monetary policy could trigger a recession, leading to higher unemployment and a bloodbath in the housing market.
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Graham Cox
Director at Bridging Hub
The term house price crash is a misnomer because it implies a quick, sudden fall. But the property market moves like an oil tanker and it takes a long time for prices to change direction. The base rate rises can also take many months to affect the economy. That said, with mortgage rates well north of 5% for even the best-qualified borrowers, and 6% on average, there can be little doubt where house prices are headed. It's likely we'll start seeing quite steep monthly falls later this year and nominal property prices could easily drop 20% over the next 18-24 months before they plateau.
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Paul Welch
Founder and CEO at Largemortgageloans.com
I think we’re still a long way off a housing market crash. Good properties in attractive locations will always sell. Houses may stay on the market a little longer than before and owners may need to review the price, but chances are that if it’s a sound property in a solid location, then it will sell. I am going to be watching the core inflation data very carefully this month as, if it has risen again or remains stubbornly high, then rates will continue to increase and we could see mortgage rates hit 7% before long. This will inevitably have an impact on people’s ability to borrow and curtail how much they can afford to borrow, which could lead to people having to sell their homes and downsize, or even move to a different area of the country where their money will go further. With more and more of us opting to work from home these days, this is a distinct possibility for many.
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Adam Smith
Founder at Alfa Mortgages
I believe the housing market will experience a correction rather than a sudden crash within the next 12 months. This hypothesis is already reflected in some properties receiving slight down valuations. Nevertheless, June and July to date have seen positive demand, especially from first-time buyers who are enthusiastically diving in and seizing attractive deals as asking prices come down. Sellers can no longer deny the harsh interest rate environment we find ourselves in. As rates rise further, a growing number of forced sales is now likely. It will all come down to whether borrowers were already stretching their affordability limits when they secured their mortgages at historically low rates of 1% or 2%. The outcome will largely depend on these individual circumstances and their particular level of financial strain.
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Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
There is now no question that sentiment in the housing market has taken a significant negative turn and it seems inevitable that the second half of 2023 will see this reflected in market activity and subdued prices. With the attempt to hit notional inflation targets from current highs the sole focus of the UK government and Bank of England — at the expense, and to the detriment, of every other consideration — tough times lie ahead. Acknowledgement that raising interest rates exclusively has failed to address rising inflation and some respite from the bludgeoning of mortgage holders to allow measures already taken to be properly assessed would be welcomed. In Scotland, with the school summer holidays now in full swing, the volume of purchase enquiries is noticeably down but at this stage it's uncertain whether that can be attributed to usual seasonal trends or current volatility.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Against a turbulent backdrop, June was just about our best ever month for mortgage numbers. It's busy and people still need to buy and sell houses for all the reasons they've always had to buy and sell houses. Yes we are shifting towards more of a buyers market but well priced stock is shifting and the latest asking price stats point towards a big fat no real change in June. Don't forget that we don't have enough houses, we don't build enough houses and the UK population is ever growing. We're a heck of a long way off of supply keeping up with demand so a full blown crash is really unlikely but you may not see much growth either.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
I think the question is not whether the housing market will see a correction, but rather how quickly prices fall. According to estimates from Nationwide, the average house price has fallen by 3.5% in the year to June 2023. Although upward pressure from a tight supply of UK housing has helped to slow the drop in property values, more and more homeowners will now feel the pinch of rate increases as they attempt to refinance their current facilities. The average 5-year fixed rate is now sat at over 6%, a level not seen since the fallout from the mini budget in November 2022. We anticipate two further 25 basis point hikes in September and November, raising the base rate to 6%. Our prediction for a 10.98% decline in residential house prices over 2023, doesn’t now seem so far away. With inflation remaining high, at 8.7% for May 2023, the city is now preparing for a peak of 6.25%.