The average house price was £293,221 in July, down 0.1% month-on-month, the first decline since June last year, according to the latest report from Halifax. The reduction pushed the annual growth rate from 12.5% to 11.8%, although the average house price still remains more than £30,000 higher than the same time last year. “While we shouldn’t read too much into any month, especially as the decline is only fractional, a slowdown in annual house price growth has been expected for some time,” said Russell Galley, chief executive of Halifax. “Leading housing market indicators have recently shown a softening of activity, while rising borrowing costs are adding to the squeeze on household budgets.” However, Galley added that some of the factors that had driven the housing market to grow rapidly during the pandemic remained. These include money saved during the lockdown and flexible and remote work practices that allow people to seek more rural locations and spacious homes. “Looking ahead, home prices are likely to come under more pressure as these market headwinds weaken further and the headwinds of rising interest rates and increased cost of living take on a more solid hold,” Galley said. “As such, a slowdown in annual house price inflation still looks the most likely scenario.” On Thursday, the Bank of England announced its biggest rise in interest rates in 27 years in a bid to curb rising inflation as gas prices push up UK energy bills this winter. The 0.5 percentage point rise takes the UK’s key interest rate to 1.75%, a 13-year high, and was the sixth increase in a row. “The key indicator of the housing market, mortgage approvals, has fallen for the past five consecutive months, suggesting that housing market activity is easing,” said Anthony Codling, chief executive of real estate data firm Twindig. “While house prices may fall in the second half of 2022, we still expect house prices to be higher at the end of the year than they were at the start.” Halifax said the strongest annual house price inflation was in Wales, up 14.7%, with an average property costing £222,639. The South West of England follows closely behind, with 14.3% and an average property costing £310,846. There was a slight slowdown in Scotland, from 9.9% to 9.6%, with a typical house costing £203,677. In Northern Ireland, the annual rate of house price inflation eased to 14%, with the average house costing £187,102. Greater London recorded the lowest annual growth rate of any region in the UK, at 7.9%, although it also has the highest average property cost at £551,777. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Iain McKenzie, chief executive of the Guild of Property Professionals, said the housing market had proven resilient in the past, even as the economy faced headwinds. He added that market fundamentals – the huge imbalance between demand for properties and sellers – combined with rising mortgage rates and a squeeze on the cost of living meant home ownership would seem like “an uphill battle” for many first-time buyers. . Walid Koudmani, chief market analyst at stockbroker XTB, said while the market may hold up this year, the longer-term outlook is now under pressure. “Make no mistake, 2023 looks like it could be a tough year for UK house prices,” he said.
