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