Property professionals divided on whether Halifax data points to soft landing in 2023


House prices rose by 0.8% to £287,880 in March, data from Halifax shows, but brokers and property professionals are divided on whether the housing market faces a soft repricing or a sharp correction this year. 

London House Image by Jonathan Wilkins from Pixabay

Forecasters say the market shows signs of recovery from September’s tax-cutting mini-Budget, which sent two-year fixed-rate loans above 6%.  

They add that home loan rates are falling despite a high base rate and inflation, at 4.25% and 10.4%, respectively. Market expectations are that both rates are close to peaks and will fall throughout the year. 

Halifax Mortgages director Kim Kinnaird says: “The principal factor behind this improved picture has been an easing of mortgage rates. 

“The sudden spike in borrowing costs that we saw in November and December has now been largely reversed, and while rates remain much higher than the average of the last decade, across the industry a typical five-year fixed-rate deal — 75% loan to value — is down by more than 100 basis points over the last few months.” 

Thomas Legal director Chris Barry broadly agrees with Kinnaird’s view on the firm’s latest House Price Index. 

Barry says: “House prices, despite the recent turbulence, should remain fairly steady throughout 2023.  

“Though demand levels dropped following the mini-Budget, the latest base rate rise may be one of the last for a while, which has increased confidence.  

“Recently, many buyers have come back to the market, something evidenced by the recent increase in mortgage approvals.  

“Demand is continuing to grow as confidence and economic stability improve, which may see supply and demand meet in the middle sometime this year, creating the perfect housing market.” 

Propertymark chief executive Nathan Emerson adds: “Estate agents are seeing a very steady picture. While winter saw a slight decline in activity and therefore prices, spring brought new activity. This trend is normal as the market flows with seasonal changes in buyer behaviour.  

“We have plenty of homes coming to the market which shows sellers are confident and that’s the key. Prices have adjusted to rising interest rates curbing affordability, but as we head into April and May, prices may pick up as more buyers will be on the move.” 

But others say a slowing economy will inevitably hit the housing market. broker Graham Cox says : “I don’t see any other outcome than a steep decline in house prices this year and well into next.  

“Mortgage approvals are down over 40% in the past few months, inflation continues to erode living standards and interest rates are still on their upward trajectory.  

“Over the next six months, I believe we’ll see very sharp falls in house prices of 1% to 2% a month. The trigger will be the traditional springtime rush to list property for sale.  

“Demand simply won’t match it, as prices are far too high given where mortgage rates are.”  

While other brokers say whether the mortgage market will have a good or bad 2023, is finely balanced. 

Alfa Mortgages broker Adam Smith points out: “The outlook for house prices in 2023 will be heavily influenced by consumer confidence, which in turn will be shaped by a complex interplay of factors including inflation and uncertainty surrounding interest rates.  

“A decline in consumer confidence could lead to a sharper decrease in the value of UK bricks and mortar, but the extent of this remains uncertain and is the million-dollar question on everyone’s mind.  

“There are so many variables at play it’s hard to know where the UK property market is going next.” 

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