House prices see biggest annual fall since 2009
House prices have fallen by 4.6 per cent in the year to August – their biggest annual decline since 2009.
The Halifax House Price Index has revealed that house prices fell 1.9 per cent on a month-on-month basis last month. The average house now costs £279,569 – down £14,000 from the peak.
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“It’s a miserable time to be selling your home and a worrying time to be buying, with prices falling faster than any time for 14 years,” said Sarah Coles, head of personal finance at Hargreaves Lansdown.
“It raises the question of whether buyers should hit pause.
“The size of the drop is likely to worry buyers that they’re getting in ahead of more falls. The bad news is that they can expect the environment to remain tough. Mortgages are still sky high, buyer demand is still miserable, and sales still nowhere near where they were a year ago.”
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Higher interest rates have dampened the property market, as would-be homebuyers rein in mortgage borrowing.
Average house prices are only back to where they were at the start of 2022, and are £40,000 ahead of the level they hit before the start of the pandemic.
Prices are falling most in Southern England and Wales, with the South East seeing a five per cent drop in value.
“The housing market is in a tough spot, with the affordability squeeze from high mortgage rates and broader cost of living pressures remaining a persistent challenge for would-be buyers,” said Myron Jobson, senior personal finance analyst at interactive investor.
“While mortgage rates have ticked lower in recent weeks, they are likely to remain lofty in the near term, with interest rates set to remain elevated in a bid to rein in stubbornly high inflation. As such, buyers will have little option but to buckle down and figure out how to make the numbers work in the new era of high mortgage rates.”
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