House Prices See First Annual Fall in a Decade

Halifax data shows house prices fell by 1.1% in May

Data from Halifax has revealed that that the average house price in May was 1.1% lower than in the same month last year. This is the first annual drop in prices the UK housing market has seen since the end of 2012.

Director of Halifax mortgages Kim Kinnaird said that the “buoyant market” we saw a year ago was a major reason for the year-on-year fall. But although the decline did not come as a complete surprise, Kinnaird did admit that it would “inevitably impact confidence in the housing market”.

Higher borrowing costs are ‘hitting confidence’

For first-time buyers, lower house prices could be seen as a good thing. But rising mortgage rates are still limiting purchasing power.

Experts have predicted that the Bank of England’s base rate will only continue to increase, which will lead to mortgage rates rising again across the market.

In a press release from Halifax, Kinnaird said that this would make both “buyers and sellers adjust their expectations”. And we’ve already seen that a record number of buyers are taking out longer-term mortgages in an attempt to lower their monthly payments.

According to the trade association UK Finance, one in five first-time buyers are now opting for mortgages spanning over 35 years. It’s thought that more people are going down this route in order to try and improve “affordability calculations” as other living costs continue to rise.

Analysts and estate agents disagree on long-term impact

Halifax is just one lender that has released figures showing a drop in house prices. Their competitor Nationwide recorded a 3.4% fall in May, too – the biggest decline in 14 years.

Although different lenders will have varying data, analysts have argued that both Halifax and Nationwide are showing signs of a stagnating market. Analysts at Capital Economics have predicted that later in the year there will be a 12% drop in house prices, from the sudden peak last August.

But estate agents have said that slower price falls in the last month are evidence that property prices may not fall much further this year.

The head of UK residential research at estate agent Knight Frank said: “The UK housing market is coming back down to earth after a strong three years, not falling off a cliff.”

Nobody can predict exactly what will happen to the housing market in the coming months. And it is a particularly uncertain time right now for buyers and sellers. But a conveyancing solicitor could help you to get the best out of your house purchase or sale.

Our solicitors are experienced and skilled in navigating the housing market, so you can feel confident that you have an expert at your side.

To find out more about how we could help you, get in touch by calling the number at the top of the screen or start your enquiry online.