Slight Drop in U.K. Home Prices Marks Start of Slowdown
Last month logged the first price decline since June 2021
BY V.L. HENDRICKSON
London saw a 7.9% jump in average prices, the largest in close to five years. The average price of a property was 551,777. | UNSPLASH
The long-expected slowdown of U.K. housing prices has begun.
The average price of a U.K. home ticked down 0.1% month over month to £293,221 (US$354,453) in July, the first decrease since June 2021, according to a report Friday from U.K. bank and mortgage provider Halifax.
Prices are still 11.8% higher than they were at this time last year, with the average residence costing about £30,000 more year over year, according to Russell Galley, managing director of Halifax.
“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,” he said in the report. “Leading indicators of the housing market have recently shown a softening of activity, while rising borrowing costs are adding to the squeeze on household budgets against a backdrop of exceptionally high house price-to-income ratios.”
However, inflation, economic concerns and rising interest rates—which the Bank of England increased Thursday to 1.75% from 1.25%, the biggest hike since 1995—are slowing growth.
“It’s not so much [the] sharp uplift in interest rates, but the prospect of even higher rises and inflation which is starting to slow house price growth,” according to a statement from
Jeremy Leaf, a London agent and a former residential chairman of the Royal Institution of Chartered Surveyors (RICS). “However, we are still not expecting a major correction while demand remains unsatisfied, rents at such a high level and employment so strong.”
Larger residences continue to outpace their smaller counterparts in terms of price growth, the data showed. The average price of a detached house jumped by 15.1% to £60,860 year over year in July, compared to 7.7% (£11,962) for apartments.
Regionally, Wales saw the greatest price appreciation, rising 14.7% annually last month, bringing the average property price of £222,639, the figures show. It was followed by the South West of England, where prices were up 14.3% for a cost of £310,846, and Northern Ireland, which registered a 14% jump to £187,102.
In London, there was a 7.9% jump in average prices, the largest in close to five years. The average price of a property was £551,777.
Via Mansion Global