House prices fall for first time since June 2021

House prices have fallen for the first time since June 2021, according the latest report from Halifax.

Prices dipped by 0.1% in July 2022, and the annual rate of growth eased to 11.8% from 12.5%.

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Halifax noted a typical UK property currents costs £293,221, representing a £365 reduction against June 2022.

The tiny fall marks the first sign of the expected housing market slowdown, which has been on the cards for analysts over the last few months as interest rates and inflation spike.

“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,” said Halifax managing director Russell Galley.

“Leading indicators of 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.”

However, Halifax highlighted several factors that remained to keep house prices at the higher end of the range, such as pandemic savings and short property supply.

“That said, some of the drivers of the buoyant market we’ve seen over recent years – such as extra funds saved during the pandemic, fundamental changes in how people use their homes, and investment demand, still remain evident,” said Galley.

“The extremely short supply of homes for sale is also a significant long-term challenge but serves to underpin high property prices.”

The cost of living crisis has been encroaching on the market horizon for months now, however, and experts have been counting down the seconds until the gravity-defying housing market finally felt the looming UK recession bite.

Meanwhile, the recent 0.5% interest rates hike to 1.75% by the Bank of England is also expected to take some wind out of the market’s sails.

“Looking ahead, house prices are likely to come under more pressure as those market tailwinds fade further and the headwinds of rising interest rates and increased living costs take a firmer hold. Therefore a slowing of annual house price inflation still seems the most likely scenario,” said Galley.

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