News

Aug 06, 2023

UK house prices drop for fourth month running, as Halifax predicts ‘gradual decline’

Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy. UK house prices dropped again last month, lender Halifax reports this morning, as higher

Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.

UK house prices dropped again last month, lender Halifax reports this morning, as higher interest rates cool the market.

But Halifax says it expects a “gradual” drop in prices in the coming months, rather than a “precipitous decline”.

Its monthly house price index, just released, shows that the average house price dropped by 2.4% on an annual basis in July. That’s a pick-up compared with June, when prices fell by 2.6% – the biggest drop since 2011.

On a monthly basis, the average house price fell by -0.3% in July, the fourth consecutive monthly decline.

It means the typical UK home now costs £285,044, down from a peak of £293,992 last August, on Halifax’s gauge of the housing market.

But, Halifax also says the market is showing ‘some resilience, although Southern England and Wales are seeing the most “downward pressure on property prices”.

For the 4th consecutive month - Avg house prices are chipped. In July 23 this was by -0.3% making the avg house now worth £285,044 down -2.4% annually and £8,948 less than Aug 22 peak. The South East & London are taking the biggest annual hit falling -3.9 & -3.5 @HalifaxBank pic.twitter.com/hgurpNuTJR

Kim Kinnaird, director of Halifax Mortgages, explains today’s report:

“Average UK house prices edged down slightly in July, with the monthly fall of -0.3% equivalent to a drop of around £1,000 in cash terms. While this was the fourth consecutive monthly decrease, all have been smaller than -0.5%.

“In reality, prices are little changed over the last six months, with the typical property now costing £285,044, compared to £285,660 in February. The pace of annual decline also slowed to -2.4% in July, versus -2.6% in June.

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.

This is the latest in a series of signs that higher interest rates have cooled the housing market.

Last week, rival lender Nationwide reported that house prices fell at the fastest annual rate in 14 years last month, by 3.8%.

And online portal Rightmove reported last month that the average price tag on a home coming onto the market fell by £905 or 0.2% in July.

European stock markets are set to open lower, after a late drop on Wall Street on Friday night saw the Nasdaq 100 and S&P500 both post their worst weekly performances since March.

Late US sell-off set to weigh on European open https://t.co/A40dlWNZSu @CMCMarkets

The Bank of England’s chief economist, Huw Pill, will hold a Q&A this evening about the cost of living and current economic conditions, just a few days after the BoE raised interest rates to a 15-year high.

UK companies posting earnings today – PageGroup - US companies – Monday – KKR, Tyson Foods - Economic data – Halifax House Prices, Germany Industrial Production, US Consumer Credit

7am BST: Halifax UK house price index for July

11am BST: Spanish consumer confidence for July

5pm BST: Virtual Q&A with Bank of England chief economist, Huw Pill