UK house prices post first decline since May: Halifax
The market is still trying to find its footing after an increase in transaction taxes earlier this year
[LONDON] UK house prices fell from an all-time high in September, according to one of the country’s top mortgage lenders, suggesting fears of tax rises are dampening demand from prospective homebuyers.
The average price of a home declined 0.3 per cent to £298,184 (S$517,786), the first drop since May, Halifax said on Tuesday (Oct 7). House values were up just 1.3 per cent from a year earlier, the smallest annual gain since April 2024.
The figures suggest already-stretched homebuyers are turning more cautious amid rising speculation that Chancellor of the Exchequer Rachel Reeves will raise taxes at the Nov 26 budget to put the public finances back on track. At the same time, the market is still trying to find its footing after an increase in transaction taxes earlier this year.
“Sellers are getting the message that house prices are under pressure due to higher levels of supply and a creeping mood of caution as November’s Budget approaches,” said Tom Bill, head of UK residential research at Knight Frank. “Stable mortgage rates have supported demand but we believe prices will continue to dip modestly before ending the year broadly flat.”
The figures contrast with data from rival mortgage lender Nationwide Building Society, whose own index showed house prices rising a stronger-than-forecast 0.5 per cent last month.
Halifax said easing mortgage costs and strong wage growth have helped improve affordability and support demand this year.
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However, those positive forces are starting to fade. As inflation edges up towards 4 per cent, Bank of England (BOE) officials are becoming more divided on when to lower borrowing costs again and mortgage rates have stopped falling. Households are feeling the squeeze as rising essentials eat into pay and job cuts begin to spread.
The North East and the North West recorded the strongest house price growth across English regions, the Halifax report also showed. In contrast, values barely grew over the year in London, the UK’s most expensive region where an average home costs around £543,497.
BOE data showed that banks and building societies approved just under 65,000 mortgages in August, a slight dip pointing to continued stability in the housing market. However, affordability remains stretched, with first-time buyers paying five times their annual earnings on average and a multiple of almost eight in London, according to Nationwide.
Help for aspiring homeowners could be under way. Labour has put forward proposals to accelerate deals and save first-time buyers thousands of pounds.
The reforms, which include requirements for sellers and estate agents to provide buyers with information about the property upfront, are meant to halve the number of failed sales and prevent late fall-throughs, the government said.
“Although the broader economic outlook remains uncertain, with the affordability picture gradually improving, we continue to expect modest growth through the remainder of the year,” said Amanda Bryden, head of mortgages at Halifax. BLOOMBERG
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