Property prices drop in July for fourth month in a row

Mortgage lender Halifax has said average property prices dropped for a fourth consecutive month in July, as the housing market continued to track the performance of the wider economy.

In real terms, this means that a typical home now costs £285,044, down from a peak of £293,992 in August 2022. However, following prices rises earlier in the spring, values are effectively comparative to February of this year, when an average house cost £285,660.

House prices fell in July in almost all parts of the UK, with the exception of the West Midlands, which remained flat. The greatest house price fall was seen in the South East, with Greater London mirroring that trend, dropping by -3.9% and -3.5% respectively

There was a slight easing in the annual rate at which prices dropped, according to the lender’s latest house price index, with property prices falling by -2.4% year on year, a slight improvement on June, which saw prices dropping at a rate of -2.6%.

Mortgage rates in particular continue to hold back buyers, as the Bank of England’s interest rate, currently standing at 5.25%, continues to increase, as it fights to lower inflation.

First-time buyers have been most impacted by these rate rises, as mortgage offers at higher rates make a move financially unviable. Halifax said that there were nevertheless signs of hope, with this sector of the market showing some resilience and adaptability.

“We’re seeing activity among first-time buyers hold up relatively well, with indications some are now searching for smaller homes, to offset higher borrowing costs,” noted Halifax mortgages director, Kim Kinnaird.

A number of estate agents noted considerable reductions in asking prices as properties languish on the market, particularly over the traditionally quieter summer months, providing opportunities for buyers looking to get on the property ladder. “I have seen clients negotiating around 5% off average asking prices recently,” said Kirsty Wells, director at Blueprint Mortgages.

Affordability remains a key concern, however, as housing stock continues to be in decline. Ian McKenzie, CEO of The Guild of Property Professionals, warned of the importance of committing to building homes that are truly affordable, along with tackling inflation, which despite recent falls stands at 7.9%.