Just what is going on with house prices at the moment? According to Halifax, the UK’s largest mortgage lender, house prices rose 1.8% in October – this news contrasts sharply with Nationwide’s figures for the month which showed a drop in prices of 0.7%.
The 1.8% fall reported by Halifax needs to be taken in the context of the record 3.6% drop that it announced in September (later revised down to -3.7%) , but such a huge swing from one month to the next will surely lead people to question the value of these monthly figures.
In its release, Halifax was keen to focus on the quarterly change in house prices rather than the monthly figure. This three-month measure is considered to be the more accurate indication of the current direction of house values and this is particularly evident at the moment.
While Halifax and Nationwide’s figures for October vary hugely, their three-month figures tell a similar story – Halifax says that “prices in the three months to October were 1.2% lower than in the preceding three months”, while Nationwide says they were 1.5% lower.
Such big variations in prices, both from month to month and between the two different indices (both these lenders use their own mortgage approval data to compile their figures), are indicative of the low volume of transactions in the housing market at the moment – changes in the demand and/or supply of housing from one month to the next can cause major price volatility. That said, it is clear from the quarterly figures from both lenders that there is a general downward trend in prices at the moment.
This volatility means that mortgage lenders are still very cautious when it comes to valuing a property and if you’re buying a home at the moment and need a mortgage, then it’s worth bearing this in mind when you’re house hunting. Speak to a broker before you make an offer so you’ve got a good idea of your budget and what you can afford.
The bigger the deposit you can get together, the better - this will improve your chances of getting a mortgage and will give you access to as wide a range of deals and competitive rates as possible.