British House Prices Continue to Fall, Expected to Decline Further in 2024
LONDON – House prices in the UK have experienced a fourth consecutive monthly decline in July, and this downward trend is projected to extend into 2024, according to mortgage lender Halifax. Despite an increase in borrowing costs, the housing market has shown some resilience.
Halifax reported a 0.3 percent drop in prices from June, which adds to similar declines since April. In comparison to the previous year, prices were down 2.4 percent, a slightly smaller decrease compared to June’s 2.6 percent decline, which marked the largest drop since June 2011.
The sluggish housing market has been attributed to a series of interest rate hikes by the Bank of England since December 2021, aimed at controlling persistently high inflation. However, the decline in house prices has been relatively small compared to the surge in valuations during the COVID-19 pandemic. On average, prices remain around £45,000 ($57,250), or 19 percent, above pre-pandemic levels, according to Halifax.
Halifax noted that prices have remained relatively stable over the past six months, and demand from first-time buyers remains strong. Some of these buyers are seeking smaller homes to offset the impact of higher mortgage rates. However, the buy-to-let sector appears to be under pressure, potentially indicating an increase in the number of homes put up for sale. This could alleviate the longstanding shortage of properties on the market and further weigh down prices.
Kim Kinnaird, director of Halifax Mortgages, expects house prices to continue falling into next year. Kinnaird’s prediction aligns with previous comments made by the lender, stating that the decline is likely to be gradual rather than abrupt and unlikely to fully reverse the growth in house prices recorded in recent years.
A Reuters poll of analysts published in early June forecasted a 3 percent fall in house prices in 2023 before stabilizing in 2024. However, some economists have predicted a larger decline due to the recent increase in mortgage rates.
Imogen Pattison, from Capital Economics, stated that although house prices have shown resilience so far, the significant rise in mortgage rates is expected to result in a renewed decline in demand. At the same time, the previously restricted supply of properties is easing. As a result, Capital Economics anticipates that house price falls will accelerate in the second half of the year, leaving prices 10.5 percent below their peak according to the Nationwide measure.
Nationwide, another mortgage lender, reported last week that its index of house prices experienced the largest decline since 2009 in the 12 months leading up to July.
($1 = £0.7860)
