Housing prices have started to fall as the cost of living crisis and rising interest rates take their toll on the property market.
The average house price has fallen by £365, or 0.1pc, in value in the past month after years of strong growth, as experts warned the property market had reached a tipping point, according to figures from Halifax, the bank. Housing prices could fall by up to 10% over the next year, according to industry forecasts.
The annual growth rate slowed from 12.5 pc to 11.8 pc between June and July. The average house costs £293,221, according to Halifax.
The Bank of England raised the Bank Rate for the sixth consecutive time, from 1.25% to 1.75% to tackle runaway inflation on Thursday, the fastest rise since 1995. It sparked a fresh rising mortgage costs for millions of variable rate borrowers. mortgage rates.
Russell Galley of Halifax said he expects house prices to come under more pressure in the coming months as rising interest rates and soaring cost of living hurt finances Household.
“Leading indicators for the housing market have recently shown slowing activity, while rising borrowing costs are adding to the squeeze on household budgets amid unusually high house price-to-income ratios,” he said. he declared.
Wales has had the highest house price inflation of any British region or nation, with annual growth of 14.7% taking the average cost of a house to £222,639, according to Halifax. In England, homes in the South West saw the biggest increases, growing 14.3% to an average price of £310,846.
Prices for larger homes, including single-detached homes, rose more than twice as fast as apartment prices in a shift in demand towards larger properties, rising 15.1% and 7.7% respectively , according to Halifax.
Graham Cox of mortgage broker SelfEmployedMortgageHub warned that mortgage rates could hit 5% by the end of the year, which would be “catastrophic” for anyone striking a fixed rate deal.
“I think prices are about to drop, and quickly, maybe 5% to 10% over the next 12 months,” he said.
Alice Haine of broker Bestinvest said it was only a matter of time before rising prices and a struggling economy hurt the property market.
“Once a recession sets in, the threat of job losses will emerge – damaging buyer confidence and dampening the market in the process,” she added.