UK house prices falling for first time since June, says Halifax

Squeeze on real wages and economic uncertainty are continuing to put potential house buyers off, says lender

UK house prices fell unexpectedly in December, their first fall in six months, according to Halifax.

The average price of a home fell by 0.6% to £225,021 in December, the mortgage lender said. The annual growth rate declined to 2.7% in the three months to December from 3.9% in the previous three months.

Many forecasters are expecting the market to slow further, pencilling in UK price growth of about 1% this year, which would mean property values falling in real terms (when adjusted for inflation). London prices are expected to continue to slide, in stark contrast to the 70% growth seen over the past decade.

Chris Taylor, the managing director of property consultancy Regency Residential, said: “This decline in the market is mainly a correction where London is concerned, following years of unprecedented growth with many cities such as Manchester, Bristol and Birmingham seeing record selling prices.”

Nationwide, the UK’s other major mortgage lender, reported last week that UK house prices increased by just 2.6% last year, while prices in London dropped for the first time in eight years. It predicted price growth would slow further in 2018 to 1% to 1.5%.

Halifax expects house prices to grow at an annual pace of 0% to 3% by the end of 2018.

Taylor said more developers were building affordable homes. “Coupled with the chancellor’s move to abolish stamp duty for first-time buyers on properties under £300,000 and a weak pound encouraging increasing investment from abroad, this will see a stimulus in the market which should sustain prices, especially in properties outside the capital.”

Mortgage approvals for house purchases remain flat, while inquiries from new buyers have fallen for the past eight months.

Halifax’s managing director, Russell Galley, said: “The housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, while building activity, completed sales and mortgage approvals for house purchase all remained flat. This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy.”

He said a squeeze on wages and uncertainty over the economy were continuing to put potential house buyers off, although a shortage of properties on the market, low levels of housebuilding, high employment and low mortgage rates would underpin the market to some extent.

•Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.


Julia Kollewe

The GuardianTramp

Related Content

Article image
UK house prices fall for first time since June 2021, says Halifax
Market cools in July as lender warns of impact of higher interest rates and cost of living crisis

Mark Sweney

05, Aug, 2022 @7:01 AM

Article image
UK house prices rising amid shortage of properties, says Halifax
Mortgage lender says employment growth may also have boosted prices, although consumers are facing squeeze

Julia Kollewe

07, Sep, 2017 @8:42 AM

Article image
UK house prices fall 1% after Brexit vote, says Halifax
Building society records month-on-month fall in July but defies increasingly negative expert consensus by saying growth rates appear sturdy

Sean Farrell

05, Aug, 2016 @8:30 AM

Article image
UK house prices drop for first time this year, says Rightmove
Experts blame 1.3% average fall on summer distractions rather than economic factors

Kalyeena Makortoff

14, Aug, 2022 @11:01 PM

Article image
UK house prices reach new high but growth is slowing, says Halifax
Prices ended 2020 up 6% on the previous year on pent-up demand and stamp duty holiday

Mark Sweney

08, Jan, 2021 @4:20 PM

Article image
UK house prices expected to fall by 8% next year, says Halifax
Lender says market rebalancing after years of growth, as mortgage rates and cost of living push prices down

Mark Sweney

16, Dec, 2022 @11:10 AM

Article image
UK house prices fall at fastest annual rate since 2011, says Halifax
Average price of property drops by 2.6% year on year in June as mortgage rates climb

Mark Sweney

07, Jul, 2023 @7:30 AM

Article image
London house prices falling at fastest rate in nine years, says Halifax
Lender reports prices down 3.2% between January and March compared with previous quarter

Julia Kollewe

12, Apr, 2018 @8:55 AM

Article image
UK house prices fall at fastest rate in 14 years, says Halifax
Average price of property in November was £285,579, down 2.3% from £292,406 in October

Joe Middleton

07, Dec, 2022 @8:12 AM

Article image
UK house prices slide for first time in almost two years, says Nationwide
Average price of a home down 0.3% at £207,308 as British housing market is expected to face pressure in 2017

Angela Monaghan

31, Mar, 2017 @7:30 AM