October saw a sharp slowdown in annual house price growth to 7.2% from 9.5% in September, reports Nationwide, as the average house price fell 0.9% to £268,282.
This was the first monthly drop since July 2021 after the market was sent reeling by the mini-Budget, which led to a sharp rise in market interest rates. Higher borrowing costs have added to stretched housing affordability at a time when household finances are already under pressure from high inflation, explains chief economist Robert Gardner.
Jonathan Hopper (pictured), CEO of Garrington Property Finders, believes the market will continue to feel the aftershock of the mini-Budget for months. “Fewer mortgages are available, with interest rates having gone up in an express lift, rather than the gradual escalator we’d been expecting,” he says.
Asking prices are being reduced in many areas, and sellers who just months ago could take their pick of offers are now biting off the hand of a strong, proceedable buyer – even those asking for a price reduction, adds Hopper. “In some areas, sellers’ fears of declining values have triggered a surge in supply, bringing forward the traditional spring bounce in new stock for sale by up to five months.”
New buyer enquiries almost dried up as uncertainty about the future direction of mortgage repayments added to cost-of-living concerns, says Jeremy Leaf former RICS residential chairman.
“Activity has slowly started to resume since as mortgage rates began to stabilise and are now starting to fall.
“Buyers are negotiating hard as they strive to take advantage of good mortgage offers while prices continue to be supported by lack of stock,” says Leaf.
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