UK house prices fell by 4.6% annually and 1.9% in August – the most significant monthly drop since November 2022 – but Halifax says it may be a good thing for potential first-time buyers.

Latest figures published in Halifax’s House Price Index show that a typical UK home now costs £279,569, down by around £14,000 over the previous year. However, prices remain around £40,000 above pre-pandemic levels and were at a record peak last summer.

‘UK house prices fell again in August, with the monthly drop of 1.9% – the steepest since last November,’ says Kim Kinnaird, Director, Halifax Mortgages. ‘On an annual basis, prices fell by 4.6%, the biggest year-on-year decrease since 2009, though it should be noted this is relative to the record high property prices seen last summer.’

House prices are more resilient

Kinnaird adds: ‘It’s 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 expected when activity levels are lower, though overall, the pace of decline remains in line with our outlook for the year as a whole.’

Halifax expects further downward pressure on property prices for the remainder of 2023 and into 2024. ‘While any drop won’t be welcomed by current homeowners, it’s important to remember that prices remain some £40,000 (17%) above pre-pandemic levels,’ adds Kinnaird. ‘It may also come as some relief to those looking to get onto the property ladder. Income growth has remained strong over recent months, which has seen the house price-to-income ratio for first-time buyers fall from a peak of 5.8 in June last year to 5.1. This is the most affordable level since June 2020 and will be partially offsetting the impact of higher mortgage costs.’

Regional differences

Southern England and Wales have seen the most downward pressure on property prices, with Scotland showing more resilience. Annually, prices fell by 5% in the South East, 4.4% in the South West and 0.6% in Scotland.

more news