House prices have seen the fastest annual decrease since June 2011 with property values falling by 2.6 per cent annually across the UK, according to Halifax.
The average house price fell for a third month in a row, dipping by 0.1 per cent in June.
House prices peaked last summer with annual growth clocked at 12.5 per cent in June 2022, catalysed by the temporary stamp duty cut.
Kim Kinnaird, director, Halifax Mortgages, said: “With very little movement in house prices over recent months, this rate of decline largely reflects the impact of historically high house prices last summer.
StepChange said recently that 17% of its new clients are already in arrears with their mortgage
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“To some extent the annual growth figure also masks the fluctuations we’ve seen in the market over the past 12 months.”
Kinnaird explains that house prices are actually up by 1.5 per cent (around £4,000) so far in 2023, following a rebound in Q1 from the turbulence of the mini-budget last year.
She said: “These latest figures do suggest a degree of stability in the face of economic uncertainty, and the volume of mortgage applications held up well throughout June, particularly from first-time buyers.
“That said, the housing market remains sensitive to volatility in borrowing costs.”
The average two-year fixed-rate mortgage price has now rocketed to 6.4 per cent.
Sunak under pressure for soaring mortgage costs and stagnant house buildingPALast week, 27 per cent of all two-year fixes on the market were below 6 per cent, down from 40 per cent the week before and well below the 98 per cent recorded a year ago.
Kinnaird added: “With markets now forecasting a peak in bank rate of over 6 per cent, the likelihood is that mortgage rates will remain higher for longer, and the squeeze on household finances will continue to put downward pressure on house prices over the coming year.”
Alice Haine, personal finance analyst at investment platform Bestinvest, said: “These are worrying times for first-time buyers whose carefully saved deposit may no longer be enough to secure the home they want.
“Some borrowers may consider radical solutions such as longer mortgage terms, 100 per cent mortgages and downgrading the size and location of the property they purchase to ensure they can afford repayments.”
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Mortgage rates are expected to peak at 6.5 per cent by the end of the year – the highest since 1998 according to financial market expertsPAChris Druce, senior research analyst at estate agent Knight Frank, said: “While deals continue to be struck, buyers remain nervous and extremely price sensitive. This won’t change materially until we have surety about how high borrowing costs will go.”
Kate Allen, founder of Devon-based lettings company, Finest Stays, said: “Asking prices for good properties in prime locations remain firm but overall it’s without doubt a buyers’ market now.”
More than two in five (42 per cent) house sellers are accepting decreases of at least five per cent on the asking price, the highest level since 2018, according to the Zoopla House Price Index.
Nearly one in six (15 per cent) sellers are accepting a discount of more than 10 per cent on the initial asking price, while buyers are pushing for an average reduction of 3.8 per cent.
