UK house prices fall again but market ‘shows resilience’

Property prices dropped by 2.4 per cent on an annual basis, easing from a 2.6 per cent fall in June.

The typical UK property now costs £285,044, compared with a peak of £293,992 last August, the lender said.

Kim Kinnaird, Director, Halifax Mortgages, said: “In reality, prices are little changed over the last six months, with the typical property now costing £285,044, compared to £285,660 in February.

“The pace of annual decline also slowed to -2.4 per cent in July, versus -2.6 per cent in June.

“These figures add to the sense of a housing market which continues to display a degree of resilience in the face of tough economic headwinds.”

Ms Kinnaird said activity among first-time buyers seems to be holding up relatively well, with indications some are searching for smaller properties in order to offset higher borrowing costs.

She added: “Conversely the buy-to-let sector appears to be under some pressure, though elevated interest rates are just one factor impacting landlords’ business models, together with considerations of future rental market reforms.

“It remains to be seen how many may choose to exit and what that could mean for the supply of properties available to buy.”

The housing market expert warned the prospects for the UK housing market remain closely linked to the performance of the wider economy.

She said: “Several factors are providing support, notably strong wage growth, running at around + seven per cent annually.

“And, while the uptick in unemployment is likely to restrain that somewhat, it seems unlikely to reach levels that would trigger a sharp deterioration in conditions.”

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Ms Kinnaird said Halifax expects house prices to continue to fall into next year.

Myron Jobson, senior personal finance analyst at interactive investor, said: “Given the headwinds facing the housing market from softer buyer demand against a backdrop of high mortgage rates, house prices displayed a surprising degree of resilience in July.

“But home price declines remain the rule, not the exception, as affordability remains severely strained with house prices still significantly higher than pre-pandemic levels, while rising interest rates have pushed the cost of home loans to the highest level since the 2008.

Mr Jobson warned buyers to “proceed with caution". He added: “Falling house prices should be good news for buyers, especially those looking to get onto the property ladder for the first time, but they aren’t falling fast enough to alleviate the affordability pressures.

“Halifax and Nationwide aren’t singing from the same hymn sheet this month when it comes to house prices. Nationwide reported a fall in house prices at the fastest annual rate in 14 years, as higher interest rates hamper people’s ability to buy a property with a mortgage.

“The conflicting assessments is symptomatic of an uncertain market that continues to adjust to the new status quo of higher prices and higher mortgage rates.”