Annual house price growth in the UK slowed to 11.8% in July, taking the average house price to £293,221, according to the latest Halifax House Price Index, while house prices transactions fell for the first time in 13 months.
Year-on-year growth fell 12.5% in the previous month as house prices edged down 0.1% in July, the first drop since June 2021, the lender’s report said .
Wales tops the charts for annual house price inflation, up 14.7%, with an average house price of £222,639. It was closely followed by the South West of England, which rose by 14.3%, with an average house cost of £310,846.
London continues to record slower annual house price inflation than other parts of the UK, although the rate of 7.9% is the highest in almost five years, representing an average cost of l property of £551,777.
Annual inflation for first-time buyers fell to 10.7% in July, from 12.4% in June, and continues to be overtaken by price increases seen for moves, which posted an annual growth of 12 %, against 12.5%.
Halifax chief executive Russell Galley said: “While not too much to read on a single month, especially as the fall is only fractional, a slowdown in the annual growth in prices of real estate has been expected for some time.
“That said, some of the dynamic market drivers we’ve seen in recent years – such as the extra cash being saved during the pandemic, fundamental changes in the way people use their homes and investment demand – remain evident. The extremely limited supply of homes for sale is also a significant long-term challenge, but serves to support high property prices.
“Looking ahead, house prices are likely to come under further pressure as these market tailwinds fade further and the headwinds of rising interest rates and rising costs of living settling in more firmly, so a slowdown in annual house price inflation still seems the most likely scenario.
Karen Noye, Quilter mortgage expert, adds: ‘For the first time in 13 months house prices have not increased month on month. With the Bank of England base rate now at 1.75% and jumping ever higher, this could now be the start of a trend where house prices are showing some weakness.
“The pandemic has put the housing market into overdrive after the wave of activity that was then based on changing work habits, the space race, the suspension of stamp duties and ultra-low interest rates. Now that pandemic restrictions have eased and work habits have taken hold, people’s immediate desire to move has waned.
“Similarly, the stamp duty holiday has been over for some time now and interest rates are skyrocketing, meaning cheap mortgages are a thing of the past.
“All of these factors or, more importantly, the absence of these factors will reduce demand. Repossessions may increase as people struggle to pay the rising cost of living and mortgage payments and as a result , more stocks can end up in the market, and a lack of demand and an increase in inventory will have the natural effect of lowering prices.
“Fall and winter could prove to be the tipping point for many as they battle rising bills and choose to move into smaller accommodations.”