House Price Index - October 2022
Sustained 6% mortgage rates would lead to double digit price falls. If mortgage rates fall back in the next quarter, the outlook for 2023 will be very different.
The political and economic turmoil over the last few weeks has resulted in average mortgage rates spiking above 6% with ongoing uncertainty over the outlook for the UK’s public finances and economy.
The health of the housing market is inextricably linked to the health of the economy and, in particular, the cost of borrowing.
There are two aspects to consider looking ahead. First, is how the final months of the year will conclude. Second, the outlook for 2023 in the face of higher mortgage rates.
Executive Summary:
Spike in 2 and 5 year fixed mortgage rates hits demand, down a third since mini budget
Sales still being agreed at slower rate, from cash buyers and those with cheap loans - pipeline of nearly 293,000 sales in progress
No signs of any impact on pricing expected in Q4
Outlook for 2023 depends largely on trajectory for mortgage rates
Sustained 6% mortgage rates would lead to double-digit price falls eroding ‘paper’ gains over pandemic but few negative equity cases
More likely outcome is a fall in mortgage rates towards 4% and a modest decline in house prices of up to 5% over 2023 with 1m sales
Robust labour market and scarcity of supply will support pricing but markets in southern England to feel the greatest impact
