The housing market has witnessed its first annual decline in prices since 2012, coinciding with a decrease in mortgage lending to its lowest levels since the implementation of lockdown measures.
According to the latest data from the Halifax House Price Index, house prices have experienced a 1% year-on-year drop, marking the first such decline in over 10 years. The average cost of a property in the UK now stands at £286,532, down from £286,662 in April. Over the past 12 months, property prices have fallen by approximately £3,000, with a decline of around £7,500 since reaching their peak in August. The lender attributed this annual drop to the robust property market observed last year. Following a 0.4% decrease in April, house prices remained unchanged in May.
The property market has experienced a slowdown due to increased borrowing expenses and decreased affordability, driven by lenders raising their rates in response to core inflation.
Consequently, market expectations suggest that interest rates will remain elevated for an extended period. This development follows a report from building society Nationwide, which revealed that house prices witnessed their most rapid decline in May since 2009, emphasizing a contrasting trend compared to another index.
The disparity between the two indices can be attributed to variations in their housing market data, which is derived from the activity and information of their respective customer bases.