House price growth slows.

 

The latest house price index from lender Halifax shows UK house prices fell by 0.1% last month.

 

It’s the first monthly fall in average house prices since June 2021, amidst signs that the property market is slowing down.

 

Halifax said that higher borrowing costs due to Bank of England rate hikes are contributing to a squeeze on living costs, along with an “exceptionally high” price-to-income ratio for mortgage borrowing.

 

The latest official figures show that the average home sold in England now costs 8.7 times the average annual disposable income, the highest ratio since records began in 1999.

 

Russell Galley, managing director at Halifax, said:

 

“While we shouldn’t read too much into any single month, especially as the fall is only fractional, a slowdown in annual house price growth has been expected for some time.

 

“That said, some of the drivers of the buoyant market we’ve seen over recent years – such as extra funds saved during the pandemic, fundamental changes in how people use their homes, and investment demand, still remain evident.

 

“The extremely short supply of homes for sale is also a significant long-term challenge but serves to underpin high property prices.”

 

Galley said Halifax expects house price growth to slow in the short term due to the twin headwinds of rising interest rates and high price inflation.

 

The average UK property is now worth £293,221.

 

There is wide regional variation in average house prices, with the average in London at £551,777 and the average in Northern Ireland at £187,102.

 

With the Bank of England forecasting a lengthy recession, the property market is likely to slow over the coming month.

 

Key to the impact of the recession, rising interest rate and high inflation on the property market will be the strength of UK jobs, with low unemployment currently supporting prices.

 

A lack of property market supply also appears to support house prices at current levels.

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