UK house prices fall for second consecutive month

The average UK house price has fallen for the second consecutive month and annual growth has slowed as the property market continues to run out of steam, data suggested today.

The average home fell by 0.6 per cent in January compared to the previous month, a slightly smaller drop than December’s rate of 0.8 per cent.

However, on an annual basis the property market is still rising: the average house price rose by just £4,068 in the year to January to £223,285, or an increase of 2.2 per cent, according to mortgage provider Halifax. 

Slowdown: House prices fell again in January, according to Halifax

That is the lowest yearly rate of increase since July last year, and down from 2.7 per cent in December and 3.9 per cent in November, when Halifax’s average house price hit a record of £226,408.

The data contrasts with Nationwide’s figures for January, which indicated that prices rose by 0.6 per cent compared to December, and by 3.2 per cent on January last year.

Halifax said it was still too early to see if the abolition of stamp duty for first-time buyers on properties valued up to £300,000 had any impact on the market, boosting demand.

‘Although employment levels grew by 102,000 in the three months to November, household finances are still under pressure as consumer prices continue to grow faster than wages,’ said Russell Galley, managing director at Halifax Community Bank. 

‘Additionally, it’s still too early to see any impact for first-time buyers from the abolition of stamp duty on purchases of up to £300,000, which was announced in the November Budget.

‘Despite the recent rise in the Bank of England Base Rate, mortgage rates are still very low. This, combined with an ongoing acute shortage of properties for sale, will continue to underpin house prices over the coming months.’

UK house price growth has slowed down recently, but despite that, property prices in some areas have become so high they are the most unaffordable since just before the financial crash in 2007. 

Emma Peake, local agent for estate agents Yopa said: ‘Looking at the latest Halifax house price index figures for January 2018, we’re seeing that the rate of house price growth continues to slow, with another fall in prices this month and only a small annual increase.

‘The number of house sales is also falling, and is low by historical standards, so sellers need to find a way to stand out in a competitive market.’

Jonathan Samuels, chief executive of property lender Octane Capital said the housing market was likely to continue on this trajectory this year. 

‘High inflation and low economic visibility amid ongoing Brexit negotiations are holding the property market to ransom.

‘While the lack of supply and low borrowing costs rule out a material deterioration in prices, the cost of living and caution around the UK’s exit from the EU are starting to get the upper hand.

‘2018 will see the usual see-sawing in prices but, short of any major breakdowns in negotiations or shock rate rises, the year is shaping up to be flat and uneventful.’