UK house price growth forecast halved as Iran war fallout hits housing market | House prices
UK house prices fell for the second month in a row in April as Halifax halved its annual growth rate forecast due to conflict in the Middle East.
Halifax, part of Lloyds, Britain’s largest mortgage lender, said the cost of a typical house in England fell 0.1% in April to £299,313. This follows a 0.5% decline in March.
Halifax said its annual house price growth rate slowed to 0.4% from 0.8%.
Amanda Bryden, head of mortgages at Halifax, said: “After a strong start to the year, recent global developments have added further uncertainty to the outlook.
“High energy prices in particular have fueled inflation expectations, causing markets to reassess the path of interest rates; a shift that has already increased borrowing costs for many buyers.
“This is understandably leading to some households becoming more cautious, with the cost of living once again coming to the fore and greater thought being given to planned property moves.”
The average two-year fixed mortgage rate on Thursday rose to 5.77% from 4.83% at the beginning of March, according to Moneyfacts. The average five-year fixed-rate mortgage rate increased from 4.95% to 5.69%.
Before the start of the conflict in the Middle East, the UK housing market had shown solid growth this year; The price of the average home increased by 0.8% monthly in January and 0.3% in February.
The strong start to the year had led Halifax to forecast a 1.2% annual house price increase in February.
“The problem facing the market right now is that many sellers are pricing based on expectation rather than current market reality, creating a growing disconnect between buyers and sellers,” said Chris Hodgkinson, chief executive of the House Buyer Bureau.
“While demand is still there, buyers are much more price sensitive in the current environment and homes that are not positioned correctly from day one stay on the market longer, forcing sellers to take larger discounts down the line.”
The economic turmoil caused by the conflict in the Middle East has created great uncertainty in the housing market.
Last week, Nationwide surprised real estate agents and economists by reporting that house prices rose in April at the fastest annual rate in 11 months.
Britain’s largest housebuilder said mortgage data showed house prices rose an unexpected 3% in April compared to the previous year (from 2.2% in March), resulting in the typical UK property being valued at £278,880.
Nationwide, which measures activity in the housing market differently than Halifax, has recorded four consecutive months of price increases.
The lender reported a 0.4% increase in April, following a 0.9% increase in March. City economists had expected a 0.3% monthly decline.
