House prices in the UK fell for the first time in a year in July as rising interest rates and rising inflation finally took their toll.
Rice fell 0.1 percent, the first drop since June 2021, the Halifax mortgage lender said on Friday. The average home value remained at £293,221 ($356,100), still 11.8 percent higher than a year earlier.
“A slowdown in annual home price growth has been expected for some time,” said Russell Galley, Halifax’s managing director. “Leading indicators of the real estate market have recently shown a slowdown in activity, while rising borrowing costs put additional strain on household budgets amid exceptionally high house price-to-income ratios.”
The housing market boomed during the pandemic and is still being buoyed by a shortage of homes for sale and savings built up during the lockdown. However, households across the income spectrum are now facing brutal cost-of-living pressures as inflation is expected to hit more than 13 percent in the autumn.
The burden is compounded by sharply rising borrowing costs and homeowners took another hit yesterday as the BOE announced its biggest rate hike in 27 years and warned of more rate hikes.
Real estate portal Rightmove estimates that the 50 basis point hike will bring monthly mortgage payments for first-time buyers to 40 percent of their income, a level not seen since 2012.
The BOE figures show that mortgage approvals – an indicator of future activity – fell further below their pre-pandemic levels in June.
https://www.independent.ie/business/world/uk-house-prices-fall-for-first-time-in-a-year-41891416.html House prices in the UK fall for the first time in a year