The brief resurgence witnessed in the housing market during the first quarter of this year has dissipated as the impact of higher interest rates gradually permeates household budgets, affecting those with expiring fixed-rate mortgage agreements, in particular.
Whilst house prices remained relatively steady in June, the continued spike in mortgage rates is putting more strain on housing affordability and the full effects of this on the market are yet to be seen, as our residential property expert, Gary Jeffries, discusses.
House prices trends
In June, the Halifax House Price Index reported average house prices at £285,932, down 0.1% on May. This fell further still in July to £285,044, the fourth consecutive monthly decline in a row.
According to Halifax, the annual drop of around £7,500 is the largest year-on-year decrease in house prices since June 2011 and reflects the impact of the historically high house prices last summer, together with the temporary Stamp Duty cut.
Over the past twelve months, property prices have experienced a decline of approximately £3,000 – down by approximately £7,500 from the peak observed in August 2022.
Nevertheless, prices still remain £5,000 higher compared to the end of the previous year, and £25,000 above the level recorded two years ago.
Home movers have experienced the most significant pressure on house prices, with an annual decline of -1.1% observed in May. In contrast, first-time buyers have encountered marginal inflation, with a modest growth rate of +0.3%.
The decline in prices has been particularly pronounced for existing houses, with an annual growth rate of -1.9%. Meanwhile, prices for newly built properties continue to rise, albeit at a slower rate of +2.8%, representing the most sluggish growth rate witnessed in nearly three years.
When it comes to types of property, all categories, with the exception of detached houses (+0.4%), have exhibited year-on-year declines in value.
Flats have experienced the most significant decrease, with a decline of -1.9%, followed by terraced houses (-1.0%) and semi-detached houses (-0.5%).