UK house prices fall for first time since June 2021, says Halifax
UK house prices fell for the first time in more than a year in July, as the country’s largest lender warned of the impact of higher interest rates and the broader cost of living crisis.
The average price of a home was £293,221 last month, down 0.1% month on month, the first decrease since June last year, according to the latest report from Halifax.
The marginal drop pushed down the annual rate of growth from 12.5% to 11.8%, although overall house prices remain more than £30,000 higher than at the same time last year.
“While we shouldn’t read too much into any single month, especially as the fall is only fractional, a slowdown in annual house price growth has been expected for some time,” said Russell Galley, the managing director of Halifax.
“Leading indicators of the housing market have recently shown a softening of activity, while rising borrowing costs are adding to the squeeze on household budgets.”
However, Galley added that some of the factors that have driven the red-hot growth of the housing market through the coronavirus pandemic remain, such as money saved during lockdown and the hunt for more rural locations and spacious homes with the advent of flexible and remote working practices.
“Looking ahead, house prices are likely to come under more pressure as those market tailwinds fade further and the headwinds of rising interest rates and increased living costs take a firmer hold,” Galley said. “Therefore, a slowing of annual house price inflation still seems the most likely scenario.”
On Thursday, the Bank of England announced its biggest increase in interest rates in 27 years in an attempt to curb soaring inflation as gas prices drive up UK energy bills this winter. The 0.5% rise to 1.75% takes the UK interest rate to
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