Prices have gone down slightly in the past month, but Halifax says that it is still receiving a consistent volume of mortgage applications

House prices dropped by 0.1% in June, according to Halifax. The lender has just published its monthly House Price Index and has revealed that annual house price growth fell by 2.6%, compared to a fall of 1.1% in May. The average UK property now costs £285,932 compared to a peak of £293,992 last August.

Southern England has seen the biggest fall, with prices dropping annually by 3%. In Wales, prices fell by 1.8% annually, but in the West Midlands, prices grew annually by 1.5%. ‘The average UK house price fell slightly in June, down by around £300 compared to May,’ says Kim Kinnaird, Director, Halifax Mortgages. ‘This was the third consecutive monthly fall, albeit a modest one.

Little movement in house prices

‘The annual drop of 2.6% is the largest year-on-year decrease since June 2011,’ adds Kinnaird. ‘With very little movement in house prices over recent months, this rate of decline largely reflects the impact of historically high house prices last summer – annual growth peaked at 12.5% in June 2022 – supported by the temporary stamp duty cut.’

Halifax says that these latest figures show some stability in the face of uneconomic uncertainty. The lender adds that the number of mortgage applications in June held up well, especially from first-time buyers. ‘Concerns about persistent inflation have led to a significant increase in the cost of funding,’ adds Kinnaird. ‘Coupled with the base rate rising, this contributed to a big jump in typical mortgage rates over the last month.’

New Mortgage Charter Scheme

The lender believes that the newly announced Mortgage Charter scheme from the government will provide ‘reassurance that mortgage holders have a range of options’. Halifax says that the scheme means that lenders will be flexible when supporting anyone in difficulty. ‘Extended terms, affordable repayment plans and alternative fixed rate deals are among the choices for existing borrowers seeking to mitigate the impact of higher interest rates,’ adds Kinnaird.

It’s difficult to predict what the future will hold for house prices. Inflation is likely to come down, according to Halifax, but core inflation (changes in prices of goods and services excluding food and energy) is proving to be a challenge. ‘With markets now forecasting a peak in bank rate of over 6%, the likelihood is that mortgage rates will remain higher for longer, and the squeeze on household finances will continue to put downward pressure on house prices over the coming year,’ says Kinnaird.

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