UK sees biggest fall in housing prices since 2009 financial crisis according to Halifax report

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Britain saw a record fall in housing prices in the final quarter of 2022 seeing the biggest drop since the financial crisis in 2009.

Housing prices in Britain fell during the last month of 2022, with prices in December reaching record lows. The quarterly drop in housing prices has not been seen since the financial crisis more than 10 years ago, according to Halifax.

The average house price fell by 1.5% in December, compared to 2.4% the previous month. The drop saw the fourth consecutive fall in housing prices, according to Halifax, and means the total fall is 2.5% in the year’s last quarter.

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The last time housing prices saw a fall of 2.5 was the three months to February 2009, in the midst of the financial crisis. The cost of living crisis has also seen a major slowdown on the market, with fewer mortgages being approved than expected.

Kim Kinnaird, Director of Halifax Mortgages, said: “In December, the cost of the average UK home was £281,272, a fall on the previous month of 1.5%, with annual growth slowing to +2% (from +4.6%). However, the fall in December was lower than the monthly decline of 2.4% recorded in November, even taking into account seasonal slowdown driven by the festive period.

“As we’ve seen over the past few months, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, is leading to an overall slowing of the market.”

The 2022 housing market was a mixed picture, according to Halifax. The first six months saw a rapid post-pandemic house price growth that peaked over the summer, before descending again in September as the cost of living crisis began to bite coupled with Kwasi Kwarteng’s disastrous mini-budget.

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In a historic context, the average house price remains higher than it was at the start of 2022, and 11% higher than January the previous year. January and August 2022, was a strong period for sellers, when the average price rose by over £17,000, a 6% growth to a record high of £293,992.

Kinnaird said: “As we enter 2023, the housing market will continue to be impacted by the wider economic environment and, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall, with house prices forecast to fall around 8% over the course of the year.

“It’s important to recognise that a drop of 8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.”

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