Street in southern England with typical houses. There is a main street in a village with typical British houses on the side. They are red and white with a wall and a small gate on the front.
Halifax house price index (HPI) is one of the best measures of the housing market in the UK. The index tracks the prices of the properties which are financed by the Halifax Bank of Scotland (HFOS). The bank is one of the biggest mortgage lenders in the country.
After a strong rebound in the first quarter of 2023, housing prices are once again in a downtrend. The housing market in the UK and USA is currently facing strong headwinds from the high interest rates in both countries. The increase in interest rates pushes the mortgage rates up, which makes houses less affordable.
The Halifax house price index shows that housing prices have been on a constant decline since March 2023. After a 0.8% increase on an MoM basis in March, the prices have fallen for five consecutive months. In August 2023, the prices decreased by 1.9%, which was the biggest loss since November 2022.
Although the real estate market is still showing some resilience, the effect of high interest rates has started to reflect. HPI index shows that on an annual basis, prices have fallen 4.6%, which is the biggest YoY decrease since the financial crisis of 2009.
The following chart shows the MoM history of the Halifax house price index. It is often said that the real estate is the last market to crash. While the equities prices have significantly been impacted by the constant rate hikes, the real estate has yet to fully absorb the effect.
The Bank of England remains committed to hike rates further amid a sticky inflation in the country. This, together with the ongoing trend, suggests that the housing price will likely keep falling in the coming months.
In the meantime, I’ll keep posting my real-time outlook on the housing prices on my Twitter, where you are welcome to follow me.
This post was last modified on Sep 08, 2023, 14:25 BST 14:25