House prices dipped slightly, and Halifax has described the property market as a ‘buyer’s market’.

UK house prices fell in September, but the pace of the monthly decline has slowed, according to Halifax. The lender, who published its latest House Price Index on 6 October, says the average house price fell by 0.4% in September, compared to 1.8% in August.

The typical UK home now costs £278,601 (a decline of about £1200 since last month), which is almost the same as in early 2022.

All UK nations and nine English regions registered a house price decline annually. Prices are under the greatest downward pressure in the South East of England, falling by 5.7% over the last year.

Northern Ireland has been the most robust in house prices, with a slight decline of 0.2% compared to last year. Scotland also saw a modest annual decrease of 0.8%.

Subdued activity levels

‘This was the sixth consecutive monthly fall,’ says Kim Kinnaird, Director Halifax Mortgages. ‘Activity levels continue to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales. Borrowing costs are the primary factor, given the impact of higher interest rates on mortgage affordability. Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.’

Kinnaird adds: ‘However, with the base rate now likely at or around its peak, we are seeing fixed-rate mortgage deals ease back from recent highs. Wage growth also remains strong, which has helped with affordability, with the house price-to-income ratio now at its lowest since June 2010 (6.2 in September vs 6.3 in August).’

Base rate will remain higher

Halifax says that many economists predict that the base rate will remain higher for longer, with any significant reductions looking unlikely until inflation is much closer to the Bank of England’s 2% target. Kinnaird adds: ‘Overall, these factors are likely to keep mortgage rates elevated in comparison to recent years, constraining buyer demand and putting downward pressure on house prices into next year.’

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