Halifax reports first house price fall in over a year

Average UK house prices fell in July 2022, their first drop in over a year, according to the latest property market data from Halifax, part of the Lloyds banking group, writes Andrew Michael.

The lender’s latest house price index showed that price growth declined by 0.1%, or £365, month-on-month since June, valuing an average UK home at £293,221.


Halifax also reported an easing in the annual rate of house price growth to 11.8%, down from 12.5% last month.


Earlier this week, separate house price data from both the Nationwide building society and Zoopla also indicated a slight relaxation in the strength of the UK’s property market.


Halifax acknowledged that leading indicators of the housing market have recently shown a softening of activity and that rising borrowing costs are adding to the squeeze on household budgets.

Yesterday, in a bid to stave off steepling inflation, the Bank of England raised interest rates for the sixth time in seven months to 1.75%, their highest level in 27 years. It also warned of double-digit inflation levels for the UK by the year end and that a recession was likely.


Halifax said that price gains for larger properties are noticeably outpacing those for lower homes. The price of a detached house has jumped by 15.1%, the equivalent of £60,860, over the past year, compared to a rise of just 7.7% (£11,962) for flats.


In terms of regional price performance, Wales moved back to the top of the table in July with annual inflation up by 14.7%, valuing an average property in the principality at £222,639. This was followed by the south west of England (up by 14.3%) and Northern Ireland (up by 14%).


London continued to record slower annual house price growth compared with other parts of the UK. But its figure of 7.9% was the capital’s largest increase in five years.


Russell Galley, Halifax’s managing director, said: “Looking ahead, house prices are likely to come under more pressure as market tailwinds fade further and the headwinds of rising interest rates and increased living costs take a firmer hold.”

Martin Beck, chief economic adviser to EY ITEM Club – an economic forecasting group – said: “After Nationwide’s measure of house prices showed a 0.1% rise in house prices in July, the Halifax measure went one further, delivering an outright fall. 


“Granted, the fall of 0.1% on June’s level was modest, while annual growth stood at a still-strong 11.8%. But July’s decline was the first fall since June 2021, and consistent with a housing market increasingly under pressure from a variety of headwinds.”


Nicky Stevenson, managing director of national estate agent chain Fine & Country, said: “The supply crunch which underpinned the housing market boom has begun to ease in recent months and the pace of price growth has softened slightly as a result.”


She added: “Meanwhile cheap debt is fast disappearing and, against this backdrop, we can expect to see a dampening effect as purchasing power continues to be eroded.”


Adapted from an article by Laura Howard & Andrew Michael for Forbes.co.uk 5th August 2022