Housing market sees largest year-on-year price drop in a decade

Average monthly house prices also fell slightly, dropping by £300, with a typical property now costing £285,932, with this being the third consecutive month fall in house prices.  

These decreases – according to Halifax Mortgages’ director Kim Kinnaird – largely reflect the impact of historically high house prices last summer, peaking annually at 12.5% in June 2022. This was supported by the temporary Stamp Duty cut.  

She added: “To some extent the annual growth figure also masks the fluctuations we’ve seen in the market over the past 12 months. Average house prices are actually up by +1.5% (£4,000) so far this year, with most of that growth coming in the first quarter, following the sharp fall in prices we saw at the end of last year in the aftermath of the mini budget. 

“These latest figures do suggest a degree of stability in the face of economic uncertainty, and the volume of mortgage applications held up well throughout June, particularly from first-time buyers. That said the housing market remains sensitive to volatility in borrowing costs.  

“Concerns about persistent inflation have led to a significant increase in the cost of funding. Coupled with base rate rising by another 50bp, this contributed to a big jump in typical mortgage rates over the last month. 

“The resulting squeeze on affordability will inevitably act as a brake on demand, as buyers consider what they can realistically afford to offer. While there’s always a lag effect when rates go up, many existing mortgage holders with variable deals or rolling off fixed rates will likely face an increase in the next year.” 

Despite the overall drop, Halifax’s latest figures do suggest some resilience in build property prices – which increased by 1.9% annually. However, the rate of growth has continued to slow, and has now dropped to its lowest level in more than three years.  

Existing properties, meanwhile, decreased by 3.5% year-on-year – the steepest decline since August 2009. Prices also fell on an annual basis across all property types led by flats – down 3.1% – and terraced home – dropping by 2.5%. Additionally, the declines for semi-detached and detached home were down 1.9% and 1.3% respectively.   

Looking at the national and region house prices, annual prices are now falling in most parts of the UK, with the only exceptions being the West Midlands, Yorkshire and Humberside and Northern Ireland – going up to £251,139, £203,674 and £186,856 respectively.  

The South of England remains the area where house prices are facing the most downward pressure, with the three percent annual fall in the South East being the largest since July 2011 – with the average house price now being £384,106.  

Additionally, London recorded an annual decline of 2.6% with an average property price of £533,057. This is the weakest performance seen in the capital since 2009 and a drop of around £15,000 over the last year.  
In Wales, house prices declined by 1.8% – compared to a one percent increase in May – the nation’s first year-on-year fall since March 2013. Scotland also saw prices drop slightly on the year, albeit by 0.1%.