…By Alan Peterson for TDPel Media. According to the Halifax index, annual house price growth in the UK turned negative for the first time since 2012 in May. House prices across the country fell by 1.0%, marking the first annual decline since December 2012.
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The average house price remained relatively unchanged, with 0.0% month-on-month growth, reaching £286,532.
Factors Influencing the Decline
Kim Kinnaird, Director of Halifax Mortgages, noted that the slight decline in May can be attributed to a comparison with strong house prices during the same period the previous year.
Prices have fallen by approximately £3,000 in the last 12 months and are down by around £7,500 from the peak in August.
However, when compared to the end of last year, prices are still up by £5,000, and they remain £25,000 higher than two years ago.
Impact of Higher Interest Rates and Market Expectations
The recent upturn in the housing market during the first quarter of the year has subsided, largely due to the impact of higher interest rates affecting household budgets. Additionally, the anticipation of further interest rate hikes has led to rising fixed mortgage rates across the market.
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This has impacted confidence in the housing market, resulting in cooling demand as buyers and sellers adjust their expectations.
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Consequently, further downward pressure on house prices is anticipated.
Labor Market as a Supportive Factor
The labor market continues to provide support to house prices.
While unemployment has slightly increased from record lows, sustained wage growth could improve housing affordability over time.
However, with consumer price inflation remaining stubbornly high and expectations of further rate increases, the housing market is expected to face challenges in the coming months.
Increased Property Availability and Market Confidence
Nathan Emerson, CEO of Propertymark, highlighted that the property market remains sturdy, with steady house prices.
Propertymark data shows a significant 70% increase in properties available for sale compared to April 2022, indicating sellers’ confidence and providing buyers with more options and room for negotiation.
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