UK House Costs Fall By £7.5k in Biggest Price Drop Since June 2011

Image by Mohamed Hassan from Pixabay

House prices in the UK have fallen by an average of £7,500 this June, in the biggest property price drop since 2011.

Britain’s biggest mortgage lender Halifax said the average price fell by 2.6% compared with last year, meaning the average property in the UK now costs £285,932.

The latest decrease in housing prices is thought to be caused by increasing mortgage rates, driven by the recent interest rate hikes by the Bank of England to curb inflation.

Halifax mortgage director Kim Kinnaird said “Concerns about persistent inflation have led to a significant increase in the cost of funding. Coupled with the base rate rising by another 50bp, this contributed to a big jump in typical mortgage rates over the last month.”

Figures from mortgage experts Moneyfacts show that an average two-year fixed residential mortgage rate today is 6.54%. This is up from an average rate of 6.52% last week. Homeowners have been warned that fixed-rate deals could reach 7% this summer as interests continue to soar.

Leading economist Allan Monks, of JP Morgan, said some indicators suggested the Bank of England’s key rate would have to rise a further two percentage points to 7% to curb inflation as prices continued to climb. The Bank of England has been warned pushing interest rates to 7% could send shock waves through Britain’s housing market and average prices tumbling.

But despite fears around the housing market, house prices are still up by 1.5% or around £4,000, so far in 2023.

Ms Kinnaird added: “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.

“Extended terms, affordable repayment plans and alternative fixed-rate deals are among the choices for existing borrowers seeking to mitigate the impact of higher interest rates.

“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.”

View the average house prices across the UK and the annual increase or decrease, according to Halifax.

  • East Midlands, £333,343, minus 2.1%
  • Eastern England, £238,755, minus 1.1%
  • London, £533,057, minus 2.6%
  • Northeast, £186,856, 0.2%
  • Northwest, £168,240, minus 0.9%
  • Northern Ireland, £223,493, minus 0.4%
  • Scotland, £201,774, minus 0.1%
  • Southeast, £384,106, minus 3.0%
  • Southwest, £301,248, minus 2.1%
  • Wales, £215,183, minus 1.8%
  • West Midlands, £251,139, increase 1.5%
  • Yorkshire and the Humber, £203,674, increase 0.2%