House Prices Drop for First Time in a Year

House prices have dropped for the first time in a year, according to one leading mortgage lender. Property values nudged down 0.1 per cent in June, says the Halifax, heralding a pause in the high double-digit rises of recent months. However, a rival house price tracker from The Nationwide posted an 11 per cent rise but noted the “tentative signs of a slowdown” has yet to feed through to the statistics. The Halifax confirmed the slight drop was the first fall in prices since June 2021, while annual growth dropped 11.8 per cent from 12.5 per cent in June. The bank estimates the cost of an average home is now £293,221 - about £30,000 more than a year ago.

Slowdown expected

The Nationwide reported a monthly 0.1 per cent rise and an annual upwards change of 11 per cent but calculated the cost of an average home as £271,209. Halifax managing director Russell Galley said: “While we shouldn’t read too much into any single month, especially as the fall is only fractional, a slowdown in annual house price growth has been expected for some time.

“Leading indicators of the housing market have recently shown a softening of activity while rising borrowing costs are adding to the squeeze on household budgets against a backdrop of exceptionally high house price-to-income ratios.”

Nationwide’s chief economist Robert Gardner added:

“The housing market has retained a surprising degree of momentum given the mounting pressures on household budgets from high inflation, which has already driven consumer confidence to all-time lows. While there are tentative signs of a slowdown in activity, with a dip in the number of mortgage approvals for house purchases in June, this has yet to feed through to price growth.”

Meanwhile, property portal Zoopla expects house prices to end the year five per cent higher.

Demand for homes is expected to weaken

The company reports a resilient market unlikely to falter soon even if demand drops sharply. The latest house price report from Zoopla said:

“House price growth and sales volumes are proving more resilient than many might have expected given the increases in the cost of living and initial increase in mortgage rates. “The housing market is not immune to these growing economic headwinds but there are good reasons why market activity has been holding up. We expect demand for homes to weaken later in the year, but we are revising up our forecasts for house price growth and sales volumes for 2022.”

Elsewhere, another property portal, Rightmove, reports asking prices have reached a record high for six months in a row - up 0.4 per cent and £1,354 in July to £369,968. The portal’s experts reckon house prices will rise seven per cent by the year-end.

More sellers come to market

A spokesman said:

“Having more new sellers this month is a win-win for the market, as these sellers will likely achieve good prices for their homes given the sixth asking price record in a row that we’ve now seen, which may help to explain the increase in new stock coming to market over the last year. “For those looking to buy, it means more choice and a slight easing in competition against other buyers while the market is still moving very quickly. In the current fast-changing economic climate, those looking to buy who find a suitable home they can afford may choose to act now rather than wait. “While more choice is welcome news, the number of homes available remains well below the more normal levels of 2019 and is unable to satisfy the continued high demand that we’re seeing.”

House price history for your neighbourhood

Use this interactive map to assess how your property investments have performed. Input the town name, and the map does the rest.  Source: ONS and Land Registry

House price digest FAQ

The figures for average house prices and movements in property values can be confusing if you don’t know how to read the data. Here are some of the most asked questions about house price indices.

Why are the average property prices different in each report?

The reports use different data to draw conclusions and take the data from different periods. Nationwide and Halifax base their indices on customer data, which are much smaller samples than the national data analysed by the ONS. Acadata’s methodology includes analysis that no other index uses. Each organisation collects data over different periods, making a direct comparison difficult.

What is the average house price?

There’s no such thing as an average home. The figure is calculated from the total value of all transactions in the sample divided by the number of homes changing hands.

What are the asking and sale prices?

The asking price is the amount an owner would like to achieve from a house sale, while the sale price is the negotiated amount paid by the buyer.

Which house price index is the best?

All have flaws because of the restricted data, but the one with the broadest sample comes from the ONS. Unfortunately, the ONS data is usually the last to market and out of date by two to three months on publication.