Throughout the signs of a slowdown in house sales during the summer season, according to the UK’s largest lender, UK house prices have fallen.
Over the month of August, house prices fell by 0.2% equating to an average of £213,930 Halifax reported.
The price drop came after a 1.1% decrease in July which overall pushed the annual rate of growth down by 6.9%.
Quarterly figures, which are believed to give a better indication of the property market, than a singular month’s data, reported a minimal growth of just 0.7%. This has been the lowest growth since December 2014 and has continued to fall substantially since it peaked to 3% in February 2016.
Activity in the housing market has depreciated since the beginning of 2016. This is when investors brought forward their purchases in an aim to beat the new stamp duty rates for second homes which was introduced in April.
Following the Brexit vote in June, there have also been signals that both buyers and sellers are holding off from joining the property market, therefore resulting in the Royal Institution of Chartered Surveyors (Rics) predicting a sharp fall in sales as a result.
Halifax has said that this fall pointed to both instructions to sell and also mortgage approvals.
The bank’s housing economist, Martin Ellis, said “The slowdown in the rate of house price growth is consistent with the forecast that we made at the end of 2015. Increasing difficulties in purchasing a home as house prices continued to increase more quickly than earnings were expected to constrain demand, curbing house price growth.”
The managing director of Garrington Property Finders; the app which help wealthy clients buy homes in the South-east, said that a year ago many people would have regarded this slowdown in house prices as cause for concern.
“But in today’s environment they are curiously reassuring – as they are further evidence that the post-Brexit property market is making a soft landing rather than slumping,” he said.
“With both supply and demand falling, the result is a benign stalemate – with average prices creeping up as the number of sales falls.”
The chief UK economist at Pantheon Macroeconomics, Samuel Tombs, said that Halifax’s lastest figures “demonstrates that the Brexit vote has scarred demand more than supply”.
He said: “Looking ahead, the forthcoming stagnation of households’ real incomes, as inflation picks up and firms moderate hiring plans, will subdue consumer confidence and constrain prices.
“Meanwhile, the Monetary Policy Committee’s decision to cut bank rate to 0.25% last month, and likely further reduction to near-zero by the end of the year, will do little to revive the market, because lenders are widening spreads to account for the greater risks of lending during a slowdown.”
Tombs has reported he expects house prices to “edge down” over the next 6 months, and to bottom out at around 3% below their pre-referendum peak.
