Obtain free UK home costs updates
We’ll ship you a myFT Every day Digest e mail rounding up the most recent UK home costs information each morning.
UK home costs fell for the fifth consecutive month and on the quickest annual tempo since 2009 as larger mortgage charges hit potential consumers, in accordance with mortgage supplier Halifax.
Property costs fell 4.6 per cent in August in contrast with the identical month final yr, when costs reached a file excessive, and is the biggest contraction since 2009, in accordance with knowledge launched on Thursday.
Costs declined 1.9 per cent between July and August, following consecutive month-to-month drops since April, Halifax mentioned.
The standard UK residence now prices £279,569, down by about £14,000 over the previous yr, however about £40,000 above pre-pandemic ranges.
Ranald Mitchell, director of Norwich-based impartial mortgage dealer Charwin Non-public Purchasers, mentioned: “The results of the will increase in borrowing prices at the moment are very obvious, with property gross sales tougher to realize and sellers being tempted by decrease gives to allow them to transfer on.” He expects the remainder of the yr to “observe this sample till client confidence in mortgage pricing returns”.
The drop was bigger than the month-to-month fall of 0.3 per cent and an annual contraction of three.45 per cent forecast by economists polled by Reuters.
Kim Kinnaird, director at Halifax Mortgages, mentioned home costs “have confirmed extra resilient than anticipated to date this yr, regardless of larger rates of interest weighing on purchaser demand”.
“Nonetheless, there’s at all times a lag impact the place fee will increase are involved, and we might now be seeing a higher affect from larger mortgage prices flowing by way of to deal with costs,” she added.
Imogen Pattison, economists at Capital Economics, expects that mortgage charges will stay round present ranges of 5.5 per cent to six per cent for the subsequent yr, which implies “demand will stay weak which we expect will trigger an extra 5.5 per cent drop in home costs”.
Mortgage charges have fluctuated at traditionally excessive ranges within the newest months reflecting altering medium-term expectations on how a lot the Financial institution of England will improve rates of interest. The BoE fee has elevated from a file low of 0.1 per cent in November 2021 to the present 5.25 per cent. Markets anticipate one other rate of interest improve later this month.
Kinnaird thinks the fluctuations in charges might have prompted potential consumers to defer transactions within the hope of some stability, and higher readability on the longer term course of charges within the coming months.
All UK nations and the 9 English areas registered an annual decline in home costs in August, with northern places typically proving to be extra resilient than areas within the south, in accordance with Halifax.
The South East was the worst-performing area with property costs falling by an annual fee of 5 per cent. The most important common annual drop in worth in money phrases was in London, down £22,800.
Wales, which recorded a few of the largest good points in property costs through the pandemic-driven race for area, has seen property costs fall 4.7 per cent over the previous yr.
In distinction, in Scotland property costs fell simply 0.6 per cent over the previous yr, the slowest tempo of decline within the UK.
Earlier within the month, the mortgage supplier Nationwide reported UK home costs falling at an annual tempo of 5.3 per cent in August, the sharpest fall since 2009.
“The autumn in each the Halifax and Nationwide home worth indices in August is unlikely to be the final,” mentioned Pattison.