Average UK house prices fell by around £1,000 in April, bringing to an end three months of increases, according to the latest Halifax house price index – one of many house price indexes that have been showing a mixed picture of where the property market is heading.
Halifax showed that the typical property value fell by 0.3% month-on-month, with the cost of an average home now at £286,896 in April - a £995 decrease from last month.
Halifax says further downward movement in prices can be expected over the coming months, with house prices in the south under significant pressure.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Kim Kinnaird, director at Halifax Mortgages, says the price movements over recent months have mirrored the turbulence seen in borrowing costs.
Latest Videos FromMoneyWeek
“The sharp fall in prices we saw at the end of last year after September’s ‘mini-budget’ preceded something of a rebound in the first quarter of this year as economic conditions improved,” she says.
Now, a number of factors combine to suggest a more stable market for potential buyers and sellers over the coming months.
A resilient economy, a robust labour market, and the expectation that consumer price inflation will fall are all positive factors that the housing market is currently adapting to.
Notably, more stable mortgage rates from lenders are giving “important certainly” to potential buyers, Kinnaird says, although rates remain well above average.
“While the housing market as a whole remains subdued, the number of properties for sale is also slowly increasing, as sellers adapt to market conditions. Alongside a market-wide uptick in mortgage approvals, these latest figures may indicate a more steady environment,” she says.
But cost of living concerns remain real for many households - a factor that could continue to subdue market activity and may further drive down prices.
“Combined with the impact of higher interest rates gradually feeding through to those re-mortgaging their current fixed-rate deals, we should expect some further downward pressure on house prices over the course of this year,” Kinnaird says.
Interest rates have risen eleven times since December 2021 and there is talk of another quarter-point increase this week - we explore whether interest rates will go up in our article will interest rates go up.
But rising rates have not deterred buyers, with mortgage approvals shooting up by 18% in March compared to February, according to Bank of England statistics.
Where have UK house prices been falling the most?
A mixed picture is emerging for house prices across the UK, with prices slumping more sharply in the south.
The regions of southern England have seen average house prices fall over the last year, with the South East registering the largest dip. Prices there have fallen by 0.6% to an average value of £387,469.
Typically, it’s these regions, including Greater London, Eastern England, and the South West, where buyers face the most expensive average property prices, and therefore the biggest impact of higher borrowing costs.
London continues to have the costliest homes of anywhere in the country at an average of £538,409 although the annual rate of growth is now negative (-0.2%).
Elsewhere, all other regions and nations across the UK saw the rate of annual property price inflation remain in positive territory during April.
The West Midlands posted the strongest annual growth of 3.1%, with an average property price of £249,554, while Northern Ireland saw increases of 2.7%, taking the average price to £186,846.
Scotland (+2.2%, £201,489) and Wales (+1.0%, £216,559) have also seen average property prices increase year-on-year.
