01/12/2022
Nationwide’s November Price Index was released today showing that price growth slowed sharply in November, some highlights include:
•Annual UK house price growth slowed to 4.4% in November, down 7.2% in October
•Prices fall 1.4% month-on-month, the biggest fall since June 2020, following a 0.9% drop in October
•The average priced has reduced £4,494, dropping to £263.788 from £268,282 in October
•Affordability is continuing to deteriorate, although the magnitude depends on the region with it generally worsening from North to South
The outlook, according to Nationwide’s Chief Economist Robert Gardner, is uncertain at best with inflation set to remain elevated for some time and further Bank Rate rises an almost certainty although a soft landing is still possible if the broader economy performs.
I don’t want to seem like the Grinch but based on the current labour shortages, productivity issues in the UK economy and a challenging political environment, I can’t imagine a soft landing is a likely scenario but falling house prices aren’t necessarily bad for everyone. It all depends of course on how much house prices fall (more on that in a moment), how high rates get and how long they stay there but first time buyers and people looking to upgrade could benefit with those looking to exit the market, downsize or in negative equity or over leveraged positions.
What we really need to pay attention to is whether the fall is big enough that it starts to negatively impact the wider economy (i.e. less spending because people feel less wealthy etc.) which could be difficult to dig out of, even if rates come down as a result. The key should be employment, if people keep their jobs and keep paying their mortgages then we’re hopefully looking at a bump in the road but jobs are lost and repossessions and forced sales start increasing then it could get worse. The silver lining is that more and more people are on fixed rates mortgages versus the 2008 crash which should provide some resilience.
Please don’t hesitate to reach out if you have any questions or need some support with your home purchase or re-mortgage.
Odin Mortgages
07724 513111
[email protected]
www.odinmortgages.co.uk
https://www.nationwidehousepriceindex.co.uk/reports/annual-house-price-growth-slows-sharply-in-november
Annual UK house price growth slowed to 4.4% in November, from 7.2% in October Prices fall 1.4% month-on-month – biggest fall since June 2020 – following 0.9% drop in October
