Halifax says house prices are falling for the first time in a year as higher interest rates put pressure on buyers…but the average house still costs £293,221
- The average house price in the UK is now £293,221
- The growth rate eased from 12.5% in June to 11.8% last month
- Wales showed the strongest annual growth in the UK with prices rising by 14.7%
UK house prices eased slightly in July, falling 0.1 percent from the previous month, the first decline since June 2021.
The annual rate of growth has also slowed, with prices rising 11.8 percent in the 12 months through July, compared to an increase of 12.5 percent in June, according to Halifax.
A typical property in the UK now costs £293,221.
The drop in growth is the first decline since June 2021, according to Halifax
‘While we shouldn’t read too much in any one month, especially since the decline is only fractional, the slowdown in annual house price growth has been expected for some time,’ said Russell Galle, managing director of Halifax.
“Main indicators of the housing market have recently shown a slowdown in activity, while rising borrowing costs are adding pressure to household balance sheets on the back of exceptionally high home price-to-income ratios.”
“Looking ahead, house prices are likely to come under further pressure as the market tailwinds, headwinds of rising interest rates and rising costs of living, fade further. So a slowing annual house price inflation still appears to be the most likely scenario.
The financial pressure on families and the rise in income-to-price ratios mean a slowdown in real estate prices, as was expected.
Tom Bell, UK head of residential research at Knight Frank, said: “Minor monthly declines in house price growth will intensify. Mortgages have become significantly more expensive in recent months, which should reduce demand as cheaper offers made earlier this year expire. The year and people doing fixed-price deals.At the same time, the supply has increased with the fading of the epidemic distortions and the fading of the stamp duty holiday, which will put downward pressure on the prices.
The BoE’s latest set of economic projections will weigh on sentiment, as it did in May, but real estate and labor market fundamentals are strong and we expect double-digit annual growth to become single-digit growth by the end of the year.”
Wales had the biggest house price inflation in July, with prices rising 14.7 per cent, with an average property price of £222,639. It is closely followed by South West England, which also continues to register a strong annual growth rate, up by 14.3 per cent, with an average property cost of £310,846.
While London continues to register slower annual house price inflation than other UK regions, the 7.9 growth rate is the highest in nearly five years. With the average property cost now £551,777, the average house price already registered in the capital continues to rise, by £40,361 over the past year.
‘As we become so used to seeing house prices go up every month, it would be easy to get excited about this unfamiliar drop,’ says Iain McKenzie, chief executive of The Guild of Property Professionals.
The truth is, the housing market has shown itself to be resilient in the face of the broader economy’s struggles, and this drop is more likely to herald a slight cooling in prices rather than anything more dramatic.
Yesterday’s interest rate hike is another factor slowly applying the brakes to the market, adding to pressures from the cost of living crisis and challenging price-to-income ratios.
“Market fundamentals remain strong, however, there is still a significant imbalance between demand for properties and the number for sale.”
First-time homebuyers saw price inflation drop to 10.7 percent in July, down from 12.4 percent in June. The growth rate still lags behind home movers, which saw an increase of 12 percent in July, down from 12.5 in June.
Price growth for larger properties continues to outpace smaller homes, with the average detached house price up 15.1 per cent over the year, compared to 7.7 per cent for apartments. These are increases of £60,860 and £11,962 respectively.
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