UK house prices fell for the first time this year, according to a measure released by Halifax, underlining the headwinds the market is facing as mortgage rates rise.
(Bloomberg) — UK house prices fell for the first time this year, according to a measure released by Halifax, underlining the headwinds the market is facing as mortgage rates rise.
The mortgage lender said its index of average prices fell 0.3% in April after small gains in each of the first three months of the year. A typical property cost £286,896 ($361,930), which was 0.1% higher than a year earlier but is 2% below the peak in August.
The monthly figures diverge from those released by rival lender Nationwide Building Society, which said last week that April prices rose for the first time in eight months. Halifax said the broader market showing “resilience” and is best described as “steady.”
“Cost of living concerns remain real for many households, which will likely continue weigh on sentiment and activity,” said Kim Kinnaird, director at Halifax Mortgages. “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.”
The two lenders have painted a different picture for the housing market in the past few months. They calculate average house prices based on the loans they’re making, which has led to Nationwide displaying a much weaker picture.
Some economist had warned that property price could slump by 10% or more this year.
A few mortgage lenders have already started to edge up the price of home loans again in anticipation that the BOE is not yet done raising interest rates in its battle against double-digit inflation.
That will add to the cost-of-living squeeze burdening households and bring fresh headaches for Prime Minister Rishi Sunak, who is trying to restore his government’s popularity ahead of an election likely next year.
The central bank is expected to deliver a quarter-point hike to 4.5% on Thursday, in what would be the 12th straight increase. Money markets are pricing in close to 5% by September.
(Updates with chart and comments from third paragraph.)
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