House prices in the UK fell for the first time since June 2021

Home prices in Britain fell for the first time in more than a year in July, according to the UK’s largest bank, as Britain’s largest banks warned of the effects of rising interest rates and the cost-of-living crisis.

According to a recent Halifax report, the average house price fell 0.1 percent month-on-month in July to £293,221, the first drop since June of last year.

The decline led to an annual rate of increase from 12.5% to 11.8%, but the average home price is still more than £30,000 higher than the same period last year.

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“You shouldn’t read too many books during the month, especially because the decline is only part of it, but the annual growth in home prices is expected to slow for some time,” said Halifax head Russell Gulley.

Leading indicators of the housing market have shown a recent slowdown in activity, while rising borrowing costs are due to pressure on household budgets.

However, Galli added that some of the factors that led to the rapid growth of the housing market during the epidemic remained. These include money saved during the blockade and flexible and remote working practices that allow people to find more rural areas and more spacious homes.

“Housing prices will be under more pressure in the future as the market tailwinds weaken and the headwinds of higher interest rates and rising costs of living become stronger,” Galli said. “Thus, an annual slowdown in house price inflation is still seen as the most likely scenario.”

On Thursday, the Bank of England announced its biggest interest rate hike in 27 years in an effort to curb skyrocketing inflation as gas prices drive up U.K. energy bills this winter. With a 0.5 percentage point increase, the U.K. prime rate rose for the sixth straight year to 1.75%, the highest in 13 years.

July home prices fell 0.1%, the first decline since June 2021

Anthony Codling, chief executive of real estate data company Tweedick, said: “The number of approved mortgages, a leading indicator of the core housing market, has been falling for the past five consecutive months, which means that activity in the housing market is declining.” “Home prices may fall in the second half of 2022, but at the end of the year we expect home prices to rise more than at the beginning of the year,” he said.

Halifax said the region with the highest annual increase in home prices was Wales, which rose 14.7 percent, with an average property price of £222,639.

It was followed by Southwest England (14.3%), with an average property price of £310,846.

In Scotland, growth slowed slightly from 9.9% to 9.6%, with a typical home price of £203,677.

In Northern Ireland, annual home price growth slowed by 14%, with an average home price of £187,102.

Greater London has the lowest annual growth rate in the U.K. at 7.9%, but has the highest average home price at £551,777.

Ian McKenzie, president of the Union of Real Estate Professionals, said the housing market has proven resilient in the past, despite headwinds in the economy.

He added that market fundamentals, combined with a huge imbalance between home demand and sellers, rising mortgage rates and declining cost of living, mean that home ownership will feel like a “tough fight” for many first-time buyers.

Walid Kudmani, chief market analyst at financial brokerage XTB, said the market may hold up well this year, but the long-term outlook is currently under pressure.