Where are these falling house prices?

Will the base rate stay at 5.25%?

The BBC has reported that interest rates are expected to be held again next month after the economy grew 0.2 per cent between July and August. The Bank of England’s chief economist Huw Pill also said that he expected future decisions on interest rates to be “more finely balanced”.

Swati Dhingra, a member of the Bank of England’s Monetary Policy Committee, said the full force of the previous rate rises has not yet “been fed through to the economy” and will hit primarily young and poor households as more fixed-rate loans and mortgages come to the end of their fixed terms and families are faced with the higher rates now available.

After so many rapid increases in the base rate that some economists criticised as too aggressive and not allowing the market to adjust, it should remain the same through the first quarter of 2024.

Why are we just helping first-time buyers?

London tenants, on average, spend 35 per cent of their income on rent from March 2022, compared with 26 per cent in the rest of England, according to the ONS. They also reported that the UK’s unemployment rate climbed from four per cent in the previous quarter to 4.2 per cent. This is the first time that the ONS has drawn on tax records and benefits claims rather than its labour force survey.

High rents and increasing unemployment will hinder first-time buyers in their pursuit to get onto the housing ladder in 2024 without help from the Government.

It's great that Jeremy Hunt is looking at schemes to help first-time buyers get onto the housing ladder; but upsizing homeowners will have to tough it out. During Covid, there were adjustments to the Stamp Duty Land Tax for properties up to £500,000, which meant anyone could benefit from the £15,000 tax saving. This galvanised the market for both first-time buyers and homeowners and saw house volumes increase not just for first-time buyers but also for existing homeowners. We are waiting on the autumn statement to see what support may be announced for home-movers.

Lowest sales volume for June

London

London has the second lowest volume of sales for the month of June since records began; the lowest was during Covid when the housing market was placed on freeze by the Government. Whilst volume increased month on month by 18% to 4,524, this is 36% down on last year's 7,119.

England & Wales

England and Wales echo London with a 35% fall year on year, which made the month of June the worst on record. With average house prices for August being only £8k off the record high set in November 2022 of £306,696, the market is set to see a fall over the next six months.



As previously flagged, the trends of the Halifax, Zoopla and Rightmove data don't show the true market picture. Even Propertymark states, "the vast majority of properties continue to sell below asking price, pointing to a pricing correction despite average house prices continuing to rise." I prefer the overall data provided by the Land Registry, and the latest data for August 2023 shows house prices in England and Wales are similar to last year and only down 1% in London. I expected to see August and September average prices fall faster; however, with sellers holding off coming to market, the average house price is holding strong.

Remortgages

Data from the Bank of England shows that the proportion of banks reporting an increase in missed mortgage payments between July and September outweighed the number reporting a fall in defaults by a margin of 43.3 per cent, up from 30.9 per cent. This is the highest level since 2009.

The Bank of England also reported that remortgage approvals fell to 20,588 in September, making this the lowest level since January 1999. Homeowners are sitting tight waiting for lower-rate mortgages - a wait that could last until mid-2024.