Yahoo News House prices rise defying forecasts of double-digit crash
House prices are on track to defy gloomy expectations of a double-digit drop this year.
Prices unexpectedly increased in November, the second month in a row, as lower mortgage rates boosted buyer confidence amid a shortage of sellers.
Homeowners saw the value of their property increase by 0.5pc in November compared to October, according to the Halifax house price index.
It was the second monthly gain in a row after six consecutive falls before that. It means a typical home is worth £283,615, up around £1,300 on the previous month.
On an annual basis, prices were down 1pc compared to November last year, a sharp fall from the 3.1pc decline in the year to October.
The increase comes after separate data from rival lender Nationwide also showed house prices rose in November compared to the previous month.
It indicated that property values rose 0.2pc on a monthly basis, while the annual fall was cut significantly from 3.3pc to 2pc.
Kim Kinnaird, of Halifax, said: “The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand.”
She added: “With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases.”
The Office for Budget Responsibility (OBR) had previously predicted in March that house prices would crash close to 10pc in 2023.
But in its latest forecast unveiled alongside the Autumn Statement it said prices are now expected to be up almost 1pc for the year.
It has previously admitted that it made “genuine errors” in its previous economic forecasts in March 2021 and March 2022, underestimating the shock of inflation caused by Covid and the war in Ukraine.
David Miles, one of three members of the OBR’s executive team, said that the March 2023 forecasts were “almost guaranteed to be wrong” shortly after they were published, adding that the watchdog had been subject to accusations of being both “ridiculously optimistic” and a “bunch of pessimists”.
The latest figures from Halifax come after Nationwide posted a surprise increase in prices and reflect a dwindling number of sellers putting their properties on the market.
Karen Noye, of wealth managers Quilter, said: “New statistics on UK house prices suggest a market that’s cautiously threading its way towards stability.”
She added: “The push and pull of limited housing stock against high rental costs are nudging individuals towards homeownership. However, the shadows of steep mortgage rates and broader economic uncertainties are acting as a counterbalance, putting a stop to a more dynamic resurgence of the market after a long period of inactivity.”
Guy Gittins, chief executive of estate agents Foxtons, said: “A second consecutive monthly increase demonstrates further signs of property market positivity today.
“Although the market is yet to return to full health when viewing house price performance on an annual basis, it appears as though a freeze in interest rates is helping to boost homebuyer sentiment and bring a greater degree of stability.”
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