House price growth slows to lowest in two years

The UK’s annual house price growth slowed to 4.4% in November, down from 7.2% in October, data from Nationwide reveals.

The 1.4% month-on-month fall in prices is the biggest fall since June 2020 – and comes after a 0.9% drop in October.

Robert Gardner, Nationwide’s chief economist, said: “The fallout from the mini-Budget continued to impact the market, with November seeing a sharp slowdown in annual house price growth to 4.4%, from 7.2% in October.

“Prices fell by 1.4% month-on-month, after taking account of seasonal effects, the largest fall since June 2020.”

‘Market has lost a significant degree of momentum’

He added: “While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum.

“Housing affordability for potential buyers and home movers has become much more stretched at a time when household finances are already under pressure from high inflation.”

He says that the housing market will remain subdued with high inflation and the prospect of interest rates increasing affecting buyer confidence.

‘Carnage wrought by the mini-Budget’

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, said: “The carnage wrought by the mini-Budget may have tipped the property market over the edge.

“The delay in sales being completed means this is just a first glimpse of the horrors that may lie ahead, and it’s looking like the next few months could be something of a nightmare.

“Prices fell 1.4% in November, their biggest monthly drop in two and a half years.”

She added: “Kwasi Kwarteng’s ill-fated budget, caused a horrible spike in mortgage rates, which spooked the market, and buyers deserted in droves. Zoopla figures have shown that demand plummeted 44% in the following months.

“We’re not seeing anything like the full impact of this in the figures because, on average, it takes around three months to complete a sale, so it’s likely to include only around a week of sales agreed after mortgage chaos was unleashed. “

‘Shortage of supply and strong employment’

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “Prices are softening but could have fallen further were it not for those two stalwarts – shortage of supply and strong employment, despite continuing concerns over the rising cost of living and particularly mortgage repayments.

“The problem is not existing sales, the overwhelming majority of which are proceeding, but new business.

“However, some buyers are returning now that mortgage rates are beginning to fall but they are more aware of their stronger position so are negotiating hard.”

Alex Lyle, a director of Richmond estate agency Antony Roberts, said: “The market has proved to be remarkably resilient, despite increasingly challenging conditions.

“This slowdown in price growth is not surprising as we are finding that sellers are being sensible and considering lower offers, sensing that sentiment has shifted a little over the past few months.”

‘Impact of the Kwasi Kwarteng Budget being felt’

Tomer Aboody, director of property lender MT Finance, said: “With the full impact of the Kwasi Kwarteng Budget being felt, the fall in prices isn’t surprising as markets reacted sharply, resulting in higher mortgage rates and lack of confidence.

“As the market continues to stabilise since Rishi Sunak took over, we should see a steadier picture going forward.”

Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “House prices continue to rise year-on-year but at a considerably slower pace as higher mortgage costs, along with the rising cost of living, impact on affordability.

“Swap rate volatility has calmed significantly since the mini-Budget debacle when mortgage rates soared.

“A number of lenders have reduced the price of their fixed-rate mortgages since then but even so, there are still many people coming off fixes who are in for a payment shock.”

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