House prices grow at their weakest pace in more than a decade
House prices grow at slowest pace in more than a decade as cost of living and rising interest rates take their toll on the real estate market
House prices rose at their slowest pace in more than a decade last month, as rising interest rates and cost-of-living tightness took their toll on the real estate market.
The value of a typical home was £286,896 in April – just 0.1 per cent higher than a year earlier, figures published by Halifax revealed.
It is the weakest year-on-year growth since December 2012 and “further downward pressure” is likely in the coming months, the lender said.
The figures come days before another expected rate hike from the Bank of England, which will send borrowers into even more distress.
House prices fell 0.3 percent – or about £1,000 – in April compared to March after three months of growth, data showed.
House prices rose at their slowest pace in more than a decade last month as rising interest rates and cost-of-living pressures took their toll on the real estate market
The value of a typical home was £286,896 in April – just 0.1 per cent higher than a year earlier, figures published by Halifax revealed
House prices fell by 0.3 per cent – or about £1,000 – in April compared to March after three months of growth, data showed
But it is the slowdown in annual house price growth that is most notable.
Prices rose by 1.6 percent on an annual basis in March, but a month later they had barely risen. They are now about £7,000 below their peak from last summer, although they are still £28,000 higher than they were two years ago.
“House price movements in recent months largely reflect short-term volatility in borrowing costs,” said Kim Kinnaird of Halifax Mortgages.
The housing market was ravaged last fall as lenders hiked rates amid the chaos following then-chancellor Kwasi Kwarteng’s disastrous mini-budget.
Ms Kinnaird pointed to positive signs: unemployment remains low, inflation forecasts are set to fall and mortgage rates are stabilizing, although they are much higher than in recent years.
However, she added: “Cost of living concerns remain real for many households… Combined with the impact of higher interest rates gradually feeding into those remortgaging their current fixed income deals, we may see some further downward pressure on expect houses. prices in the course of this year.’
Households have been hit by sustained inflation of more than 10 percent in recent months. At the same time, borrowers have faced a rapid rise in interest rates from 0.1% in December 2021 to 4.25% today as the Bank of England battles to curb inflation.
Tomorrow the Bank is expected to go for another increase – to 4.5 percent – which will cause even more pain.
Evidence from Consumer Group Which? yesterday provided further illustration of the squeeze.
It showed that an estimated 700,000 households missed a rent payment in the past month, with 5 percent of renters and 3 percent of mortgage borrowers doing so.
More than two million people missed or defaulted on at least one mortgage, rent, loan or credit card bill in April, according to the study.