UK house prices continue to slide in September

The UK’s housing market showed further signs of cooling in September with the sixth consecutive monthly fall, Halifax says.

The average house price fell by 0.4% month-on-month, and the annual rate of house price growth also slowed to -4.7%, the lowest since April 2021.

Halifax said that house prices were still supported by the low interest rate environment – the Bank of England’s Base Rate was raised from 0.1% in December 2021.

The average price of a UK home was £278,601 last month – which is slightly higher than was seen in January 2022.

However, house prices in the UK are still £39,000 higher than before the pandemic.

‘Activity levels continue to look subdued compare’

The director of Halifax Mortgages, Kim Kinnaird, said: “Activity levels continue to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales.

“Borrowing costs are the primary factor, given the impact of higher interest rates on mortgage affordability.

“Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.”

She added: “However, with Base Rate now likely to be at or around its peak, we are seeing fixed rate mortgages deals ease back from recent highs.

“Wage growth also remains strong, which has helped with affordability, with the house price to income ratio now at its lowest level since June 2020.”

‘House prices drift further south’

The head of personal finance at Hargreaves Lansdown, Sarah Coles, said: “A sluggish September saw house prices drift further south.

“Mortgage rates were starting to ease back from the peak a month earlier, but even by the end of the month were only back around the same levels as mid-June and still a significant step up from the spring.

“We’re still sitting on huge house prices gains since the onset of the pandemic, but even while mortgage rates are falling, prices may have further to drop.”

She added: “There’s good news for buyers too, because mortgage rates continue to fall.

“The average five-year rate is back below 6% (5.97%), and the average two-year rate is back at 6.43%, according to Moneyfacts.”

‘The market readjusting following a sustained boom’

James Forrester, the managing director of Barrows and Forrester, said: “A sixth consecutive monthly fall may seem like cause for concern but what we’re currently seeing is the market readjusting following a sustained boom period that saw house prices driven to record highs.

“This has materialised in the form of a slow but consistent reduction in values rather than the cliff edge drop that many predicted and despite this modest reduction, property values remain substantially higher when compared to the pre-pandemic benchmark.”

Marc von Grundherr, a director of Benham and Reeves, said: “Higher mortgage rates have been the key contributing factor with regard to cooling house prices and so it begs the question as to just how high they may have climbed if inflationary pressures didn’t force interest rates to climb.

“It’s likely that this reduction in buyer affordability will remain an issue over the long term until such a point that the Bank of England finally gets a grip on inflation.

“However, while market activity may have reduced somewhat, the market is still ticking along and we don’t expect any drastic realignment in house prices to materialise.”

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