Mortgage lender Halifax says the average price of a property across the United Kingdom fell by 0.4% in October. It means a typical UK property is now worth around £292,598.
Halifax says the annual rate of house price growth slowed to 8.3%, from 9.8% in September. The rate of growth slowed across all but one region in England.
Similar trends were seen across Wales, Scotland and Northern Ireland. The banking giant said some slowdown was expected after a house price boom during the coronavirus pandemic.
Its house price index also says there was a 'significant shock' from the mini-budget under Liz Truss' leadership, which saw a spike in mortgage interest rates. It believes those rates have peaked now, but it continues to have an impact on people looking for new mortgage rates, or deciding whether or not to press ahead with house purchases.
Across England, only the North East saw weaker annual price inflation during October compared to September. However the West Midlands now has the joint highest annual growth of any UK region at 11.7% (average property price of £254,962) down from 13.2% the previous month.
While Wales saw an annual growth of 11.7%, down from 14.4%, meaning the average house will cost £222,852. Scotland also saw a slowdown in growth, now at 7.5%, down from 8.3%, meaning a typical property will set a buyer back £203,820.
House prices in Northern Ireland are up 9.5% year-on-year, easing back from 10.9% last month. At £184,440the average house price remains some £46,500 below its pre-financial crisis peak in mid-2007.
Kim Kinnaird, Director, Halifax Mortgages, said: “Average house prices fell in October, the third such decrease in the past four months. The drop of -0.4% is the sharpest we have seen since February 2021, taking the typical property price to a five-month low of £292,598. While the pace of annual growth also continued to ease, to +8.3% compared to +9.8% in September, average prices remain near record highs.
“Though the recent period of rapid house price inflation may now be at an end, it’s important to keep this is context, with average property prices rising more than £22,000 in the past 12 months, and by almost £60,000 (+25.7%) over the last three years, which is significant. While a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant shock as a result of the mini-budget which saw a sudden acceleration in mortgage rate increases.
"While it is likely that those rates have peaked for now – following the reversal of previously announced fiscal measures – it appears that recent events have encouraged those with existing mortgages to look at their options, and some would-be homebuyers to take a pause.
“Understandably we have also seen consumer caution grow, as industry data shows mortgage approvals and demand for borrowing declining. The rising cost of living coupled with already stretched mortgage affordability is expected to continue to weigh on activity levels. With tax rises and spending cuts expected in the Autumn Statement, economic headwinds point to a much slower period for house prices.
“While certain longer-term, structural market factors which support higher house prices – like the shortage of available properties for sale – are likely to remain, how significantly prices might ultimately adjust will also be determined by the performance of the labour market. Currently joblessness remains historically low, but with growing expectations of the UK entering a recession, unemployment is expected to rise. Whilst it may not spike to the same extent as seen in previous downturns, history tells us that how this picture develops in the coming months will be a key determinant of house price performance into next year and beyond.”
