Annual house price growth turns negative for first time since 2012 – index

Annual house price growth turned negative for the first time since 2012 in May, an index showed.

In the UK, house prices fell 1.0% on average, Halifax said.

This is the first annual decline since December 2012.

The average house price was flat month-on-month, growing 0.0% in May to £286,532.

Kim Kinnaird, Director, Halifax Mortgages, said: “Given an effectively flat month, the year-on-year decline largely reflects a comparison to the high house prices at this time last year as the market continued to weaken. be dynamic as summer approaches.

“House prices have now fallen by around £3,000 over the past 12 months and are down around £7,500 from the peak in August.

“But prices are still up £5,000 from the end of last year and £25,000 above the level of two years ago.

“As expected, the brief recovery we saw in the housing market in the first quarter of this year has faded, with the impact of rising interest rates gradually trickling down to household budgets, and in particular those with fixed rate mortgages coming to an end.

“With consumer price inflation remaining stubbornly high, markets are pricing in several more rate hikes that would take the (Bank of England) base rate above 5% for the first time since the start. of 2008. These expectations led to fixed mortgage rates to start rising again across the market.

“This will inevitably impact confidence in the housing market as buyers and sellers adjust their expectations, and the latest industry figures for mortgage approvals and completed deals show demand is slowing.

“As a result, further downward pressure on house prices is still expected.”

Nathan Emerson, chief executive of estate agent body Propertymark, said: “House prices are holding up and we are in a strong market.

“Data from Propertymark revealed a 70% increase in properties available for sale compared to April 2022, showing sellers’ confidence and giving buyers more choice and room to negotiate.”

Matt Thompson, sales manager at London-based estate agent Chestertons, said: ‘The property market in May was mainly driven by buyers looking for a home rather than an investment.

Jamie Minors, managing director of Norwich-based estate agent Minors & Brady, said: “Although the annual rate of house price growth is in the red for the first time since 2012, it has a lot to do with it. with the strength of the real estate market, this time last year.

Mark Harris, managing director of mortgage broker SPF Private Clients, said: “Lenders continue to raise mortgage rates, withdrawing product with little or no notice in response in part to funding costs and in response to what other lenders.

“This will inevitably have an impact on what buyers can afford and in some cases they may put decisions on hold until the situation improves.

“Swap rates, which underpin the pricing of fixed-rate mortgages, have stabilized since inflation news sent them soaring. If this continues, we expect bond prices to mortgages also become less volatile.”

Tom Bill, head of UK residential research at estate agent Knight Frank, said: ‘This is unlikely to be the last national house price index to fall into negative territory this year.

“Mortgage rates will continue to rise as wage growth keeps underlying inflation stubbornly high and we expect prices to fall by around 5% this year.

“However, this is not the second part of the global financial crisis for house prices and any declines will be restrained by rising wages, low unemployment, cash sales, record levels of value net of housing, longer mortgages and savings accumulated during the pandemic. .

“The UK property market is coming back to earth after three good years, without falling off a cliff.”

Here are the average house prices for countries and regions in the UK, according to Halifax, with the annual percentage change. Regional annual variation figures are based on the last three months of approved mortgage transaction data:

– East Midlands, £333,364, minus 1.0%

– East of England, £240,040, 0.2%

– London £536,622, minus 1.2%

– North East, £187,334, 1.5%

– North West, £169,394, 1.6%

– Northern Ireland, £223,795, 1.6%

– Scotland, £201,596, 1.3%

– South East, £385,943, minus 1.6%

– South West, £301,079, minus 1.4%

– Wales, £218,365, 1.1%

– West Midlands, £251,137, 2.7%

– Yorkshire and Humber, £205,035, 2.3%

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