Housing market resilient despite fourth consecutive fall in prices

According to the bank’s data, the average price of a house fell by 0.3% in July – a fourth consecutive monthly decline – while property prices dropped by 2.4% on an annual basis, easing from 2.6% in June. This has resulted in the typical UK home costing £285,044 – down from a peak of £293,992 last August.

 
The market is also showing some signs of resilience with industry data showing displaying increases in activity.  

Reflecting on this, Halifax Mortgages director Kim Kinnaird explained: “These figures add to the sense of a housing market which continues to display a degree of resilience in the face of tough economic headwinds.

 
“In particular, we’re seeing activity amongst first-time buyers hold up relatively well, with indications some are now searching for smaller homes, to offset higher borrowing costs. Conversely the buy-to-let sector appears to be under some pressure, though elevated interest rates are just one factor impacting landlords’ business models, together with considerations of future rental market reforms.  

“It remains to be seen how many may choose to exit and what that could mean for the supply of properties available to buy. Prospects for the UK housing market remain closely linked to the performance of the wider economy.

“Several factors are providing support, notably strong wage growth, running at around seven percent annually. And, while the uptick in unemployment is likely to restrain that somewhat, it seems unlikely to reach levels that would trigger a sharp deterioration in conditions.

“Expectations of further base rate increases from the Bank of England were tempered by a better-than-expected inflation report for June. However, while there have been recent signs of borrowing costs stabilising or even falling, they will likely remain much higher than homeowners have become used to over the last decade. 

“The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year.”