Halifax: Higher mortgage rates push house prices down

Average UK house prices declined last month for the first time in three months, Halifax claims.

The lender’s latest House Price Index suggested average property values fell 0.3% between March and April while annual growth slowed from 1.6% to 1%.

Kim Kinnaird, director of Halifax Mortgages, said: “House price movements over recent months have largely mirrored the short-term volatility seen in borrowing costs. 

“The sharp fall in prices we saw at the end of last year after September’s ‘mini-Budget’ preceded something of a rebound in the first quarter of this year as economic conditions improved. 
“The economy has proven to be resilient, with a robust labour market and consumer price inflation predicted to decelerate sharply in the coming months.

“Mortgage rates are now stabilising, and though they remain well above the average of recent years, this gives important certainty to would-be buyers. While the housing market as a whole remains subdued, the number of properties for sale is also slowly increasing, as sellers adapt to market conditions. 

“Alongside a market-wide uptick in mortgage approvals, these latest figures may indicate a more steady environment. However, cost of living concerns remain real for many households, which will likely continue weigh on sentiment and activity. Combined with the impact of higher interest rates gradually feeding through to those re-mortgaging their current fixed-rate deals, we should expect some further downward pressure on house prices over course of this year.”

It puts the index even more at odds with Nationwide, which was reporting several months of house price declines until March and is currently claiming that prices are down 2.7% annually.

Tom Bill, head of UK residential research at Knight Frank, said: “The UK housing market is regaining its footing after being knocked sideways by last September’s mini-Budget. You can quibble about whether prices are up or down but the big picture is that annual growth is broadly flat and transactions clearly hit their low-point in January. 

“It should be a steady year, with the impact of a recovering economy kept in check by mortgage rates that are notably higher than 18 months ago. It will also be the most predictable year for the housing market since 2018. As the political temperature rises and a 2024 general election moves onto the radar, switched-on buyers and sellers are acting while the backdrop remains relatively uneventful.”