The average UK house price fell in July from the previous month’s record high, according to an index, the first month-on-month drop since June last year.
After a year of unusually strong growth, house prices fell 0.1 percent month-on-month in July, Halifax said.
This represents a drop of £365 a month in cash terms, above June’s record average house price of £293,586.
Across the UK, the annual rate of price increase eased to 11.8% from 12.5% in June.
A typical UK property now costs £293,221.
Wales topped Halifax’s table for annual house price inflation, with prices rising by 14.7 per cent.
In Scotland, the average house price was at a record high of £203,677, although it saw a slight fall in annual house prices in July, to 9.6% from 9.9% the previous month.
In London, already record house prices rose further in July.
Halifax said the average house price in the capital has risen by £40,361 over the past year.
Annual home price growth is expected to slow for some time.
Russell Galley, managing director, Halifax, said: “It’s important to note that house prices are up over £30,000 this time compared to last year.
“While we shouldn’t read too much into any one month, especially since the decline is only partial, annual house price declines have been expected for some time.
“Leading indicators of the housing market have recently shown a softening in activity, while rising borrowing costs are adding to pressure on household budgets against a backdrop of unusually high house price-to-income ratios.
“That said, we’ve seen some of the buoyant market drivers in recent years — such as additional funds saved during the pandemic, fundamental changes in the way people use their homes, and investment demand — still remain. are clear.
A decline in annual house price inflation still seems the most likely scenario.
“The extremely low supply of homes for sale is also a significant long-term challenge but serves to moderate high property prices.
“Looking ahead, house prices are likely to come under further pressure as those market tailwinds diminish further and are held more firmly by rising interest rates and rising costs of living.
“So a decline in annual house price inflation still looks like the most likely scenario.”
Anna Claire Harper, director of real estate technology platform IMMO, said: “This slight cooling will be welcomed by those struggling with affordability barriers.”
Jason Tabb, chief executive of property search website OnTheMarket.com, said: “The number of properties coming onto the market is slowly increasing, partly due to seasonal effects when we expect rising stock levels. will be available.”
Nicky Stevenson, managing director of estate agent group Fine & Country, said: “Cheap credit is fast disappearing and, against this backdrop, we can expect purchasing power to continue to decline and have a knock-on effect. will
“While the housing market and the wider economy do not always go hand in hand, the recession predicted by the Bank of England will have an impact on growth and consumer confidence.”
The real turning point could be the Bank of England’s decision to raise interest rates to 1.75%
A package of government cost-cutting support is being delivered in the coming months, with households facing the prospect of rising bills and falling real incomes for some time to come.
Alice Hein, personal finance analyst at BestInvest, said: “Once a recession hits, the threat of job losses will rear its ugly head – damaging consumer confidence and will weaken the market in the process.
“The real turning point could be the Bank of England’s decision to raise interest rates to 1.75%.”
The Bank of England raised its base rate by 0.50 percentage points on Thursday, taking it to 1.75 percent from 1.25 percent, the biggest single rate jump since 1995.
According to calculations by trade association UK Finance, this would add around £50 per month to the average tracker mortgage costs, based on the average outstanding balance.
In a dire warning on Thursday, the bank said people were facing a two-year drop in household incomes, with inflation hovering above 13 percent and the economy sinking into its longest recession since the financial crisis.
The Bank’s Monetary Policy Committee (MPC) has forecast inflation to hit 13.3 percent in October, the highest in more than 42 years.
On a real basis, household after-tax income is expected to decline by 1.5% this year and 2.25% next year.
It would be the first time that household income has declined for two consecutive years since records began in the 1960s.
Here are the average home prices in July, followed by annual home price growth, according to Halifax:
– East Midlands, £243,197, 12.2%
– East of England, £342,687, 12.2%
– London, £551,777, 7.9%
– North East, £170,688, 11.3%
– North West, £226,665, 12.6%
– Northern Ireland, £187,102, 14.0%
– Scotland, £203,677, 9.6%
– South East, £399,003, 11.9%
– South West, £310,846, 14.3%
– Wales, £222,639, 14.7%
– West Midlands, £250,051, 12.7%
– Yorkshire and the Humber, £205,249, 10.4%