The bank said that the average property in the UK now costs £285,932, compared to £293,992 at their peak last August.
Kim Kinnaird, director of Halifax Mortgages 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. Concerns about persistent inflation have led to a significant increase in the cost of funding. Coupled with base rate rising by another 50bp, this contributed to a big jump in typical mortgage rates over the last month.”
Halifax’s House Price Index differs to Nationwide’s, which showed that house prices rose by a modest 0.1% in June.
However, according to Nationwide prices were down 3.5% year-on-year. Despite house prices remaining relatively resilient in June, the property market is facing significant headwinds, with markets expecting that the base rate could exceed 6% in coming months to try to curb inflation.
Robert Gardner, Nationwide Building Society’s chief economist, said: “The sharp increase in borrowing costs is likely to exert a significant drag on housing market activity in the near term. For example, for a representative first-time buyer earning the average wage and buying the typical property with a 20% deposit, mortgage payments as a share of take-home pay are now well above the long-run average.
“Moreover, house prices remain high relative to earnings, and as a result, deposit requirements are still a significant barrier for those looking to enter the market.”
A 10% deposit on a typical first-time buyer home is now equivalent to around 55% of gross annual income, according to the building society. Although this is lower than the all-time highs of 59% seen in late 2022, it is still marginally above the levels prior to the financial crisis of 2007/8.
Regional differences
House prices declined in all regions of the UK except Northern Ireland in the three months to June, Nationwide’s data shows, although according to Halifax, the West Midlands, Yorkshire and Northern Ireland have all seen gains on an annual basis.East Anglia was the weakest performing region, Nationwide said, with prices down 4.7% compared with a year ago, whilst prices in Northern Ireland were up 0.7% year on year in the second quarter.
Mr Gardner said: ““All English regions saw a slowing in the annual rate of change compared with last quarter. London saw a 4.3% year-on-year decline, while the surrounding Outer Metropolitan region saw a 2.9% fall.”
Halifax similarly reported a 2.6% annual fall in London, taking prices there to their weakest level since 2009. This is equivalent to a drop of around £15,000 over the last year. Prices also fell in Wales and Scotland.
Halifax stated that Welsh house prices were down by -1.8% annual (average house price of £215,183), compared to a +1.0% increase in May – the nation’s first year-on-year fall since March 2013. In Scotland, prices were down slightly on the year (-0.1%, average house price of £201,774), but nonetheless significant in being the first annual contraction in property prices in the last three years.
