The largest lender in the nation issued a warning about the effects of rising interest rates and the wider cost of living crisis as UK house prices declined in July for the first time in more than a year.
According to the most recent statistics from Halifax, the average price of a home was £293,221 in July, down 0.1% month over month and the first decline since June of last year.
Although the average house price is still more than £30,000 more than it was at the same time last year, the decline pushed the annual rate of growth from 12.5% to 11.8%.
“A slowdown in annual house price increase has been forecast for some time, although we shouldn’t read too much into any single month, especially given the dip is quite marginal.”
– According to Russell Galley, managing director of Halifax
Leading housing market indicators recently showed a slowdown in activity, and rising borrowing prices are further squeezing household budgets.
Galley did add that some of the elements that had fueled the housing market’s explosive expansion during the epidemic had persisted. These include the money saved during the lockdown as well as flexible and remote working arrangements that let people look for more rural areas and roomier residences.
In the future, Galley predicted that as market tailwinds continue to wane and the headwinds of rising interest rates and growing living expenses solidify, house prices will likely be put under even more pressure. Therefore, it still looks like the most likely possibility that annual house price inflation will slow down.