UK house prices saw a 1.9% monthly drop in August — the largest monthly fall since November 2022 — but remain around £40,000 above pre-pandemic levels, according to Halifax’s latest HPI.
Property prices have dropped by 4.6% on an annual basis — from 2.5% in July — despite prices being at a record peak last summer.
The average UK home now costs £279,569, down by around £14,000 over the past year, and returning to the level seen in early 2022.
Southern England and Wales are reported to be seeing the most downward pressure on property prices, as in the Southeast they have fallen by 5% on an annual basis, with an average house price of £379,565.
Wales saw property prices fall by 4.7% over the past year with an average house price of £212,967.
This is argued to be attributable to the need for buyers to find bigger deposits and larger monthly repayments.
Gareth Lewis, managing director at MT Finance, commented: “It is natural that we will continue to see this downward trend around values, although it is not Armageddon, as prices are still higher than they were pre-pandemic.
“When there is a low interest rate environment, it is ultimately a sellers' market because they can command higher prices as more people want to buy and have the means to pay over the odds.
“With fewer buyers around, they know there is less competition, so are not going to pay inflated values but will try that low-ball offer.”
Mark Harris, CEO at SPF Private Clients, added: “With the markets still pricing in another 50bps rate rise, affordability will prey on buyers’ minds for a while yet and they are bound to be price sensitive because of it.
“The good news for borrowers is that lenders continue to reduce their fixed rates.
“Not only that, but criteria are also broadening as appetite to lend returns.”
Kim Kinnaird, director at Halifax Mortgages, concluded: “It is fair to say that house prices have proven more resilient than expected so far this year, despite higher interest rates weighing on buyer demand.
“However, there is always a lag-effect where rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs flowing through to house prices.
“Increased volatility month-to-month is also to be expected when activity levels are lower, though overall the pace of decline remains in line with our outlook for the year as a whole.”
