Why Halifax is top of the house price growth table and a forecast on how far values UK property values may fall this year

Halifax recorded the UK’s highest rate of year-on-year house price growth with values rising by 4.3 per cent and Wolverhampton with 3.7 per cent annual increase and Falkirk in Scotland with 3 per cent were second and third the table. Areas in South East England are experiencing larger price falls, particularly in commuter markets such as Southend (-1.5 per cent), Watford (-1.2 per cent) and North West Hertfordshire (-1.1 per cent), whilst prices are also falling in some lower-value markets such as Sunderland (-1.7 per cent) Aberdeen (-0.9 per cent) and Northern Ireland (-0.8 per cent). In these areas, local economic factors are impacting demand in addition to mortgage rates and cost-of-living pressures.

Higher house prices mean larger mortgages, bigger deposits and a higher household income to buy. With more households priced out of the market, reducing demand and pushing prices lower, some would-be buyers are delaying moving - sales volumes are expected to be a 23 per cent lower in 2023 compared to 2022.

Buyers are also shifting to buy smaller, lower value homes. As a result, new sales of three and four bedroom family homes are down by up to 41 per cent this month when compared to the same time period over the last five years.

Richard Donnell, Executive Director at Zoopla says: “Higher mortgage rates have hit home buyer demand once again after a sustained improvement over the Spring as mortgage rates fell to four per cent. House prices increased slightly over the last three months to June but higher mortgage rates and weaker demand mean we expect a return of modest price falls in the second half of the year.

Overall we expect prices to be five per cent lower by the end of the year, which is still 15 per cent higher than pre-pandemic levels. The impact of higher mortgage rates is far from uniform across the country. It all depends on housing affordability in local housing markets. Activity levels and prices in Southern England have been hit hardest by higher borrowing costs while the most affordable parts of the UK continue to see prices rising slowly. ”