House prices fell by 1% over the last 12 months – the first annual decline in prices in more than a decade, according to figures from the Halifax.
The mortgage lender said average house prices last month were £3,000 lower than the previous year and £7,500 below their August peak, with the average cost of a UK home now £286,532. The decline is the first since 2012.
Last week, Nationwide reported a 3.4% decline in property values in the year leading up to May – the largest fall in 14 years.
Tom Bill, head of UK residential research at Knight Frank, said: “This is unlikely to be the last national house price index to fall into negative territory this year. Mortgage rates will keep edging up as wage growth keeps core inflation stubbornly high and we expect prices to fall by around 5% this year.
“However, this isn’t the global financial crisis part two for house prices and any decline will be kept in check by rising wages, low unemployment, cash sales, record-high levels of housing equity, longer mortgages and savings amassed during the pandemic. The UK housing market is coming back down to earth after a strong three years, not falling off a cliff.”
David Hannah, chairman at Cornerstone Group International, added: “The latest house price data from Halifax, highlighting that house prices have experienced its first annual decline since 2012, will be welcome news for homebuyers, and in particular, first-time buyers. However, there are still significant obstacles when looking to purchase a home.
“A rise in mortgage rates due to inflation figures being stronger than expected is unwelcome news for homeowners. However, I believe that the housing market has recently shown significant resilience, and I have a positive outlook for the remainder of the year. Prices are starting to stabilise, which will hopefully boost lender confidence. Of course, lenders will adjust rates according to interest rates, but if they see inflation moving in the right direction, that will be crucial.”
