The annual rate of UK house price growth cooled further in August, after slowing the previous month, fresh data shows.
Halifax said that the average price of a home in the UK slowed from 8.4% in July to 6.9% in August, continuing a downward trend from March when the growth rate reached 10%, caused primarily by growing affordability issues, as price increases continue to exceed wage growth, which has curbed housing demand and caused price growth to ease.
The latest figures reveal that property prices fell by 0.2% last month after dropping by 1.1% in July, reducing the average cost of a UK home by almost £3,000 to £213,930.
Despite the month-on-month decline in home values, prices in the three months to the end of August were 0.7% higher than the previous quarter, although this also marked a slowdown in the pace of growth.
“House price growth continued the trend of the past few months in August with a further moderation in both the annual and quarterly rates of increase. There are also signs of a softening in sales activity,” said Martin Ellis, housing economist at the Halifax.
“The slowdown in the rate of house price growth is consistent with the forecast that we made at the end of 2015. Increasing difficulties in purchasing a home as house prices continued to increase more quickly than earnings were expected to constrain demand, curbing house price growth,” he added.
The Halifax measure follows on from the latest Royal Institution of Chartered Surveyors’ report which also shows that falling property prices and a significant fall in the average mortgage approval value to £171,000 in July, from a peak of £184,000 in January.
But any fears that there would be a dramatic housing market crash, largely as a consequence of Brexit, have been “drowned out”, according to Rupert Cattell, founder of online estate agent Ownersellers.com
He said: “With employment still high, the cost of living low, and a chronic shortage of stock, property prices were never going to plummet into freefall.
“Instead, prices have taken a mere pause for breath as the traditional summer lull kicked in forcing transactions to drop and instructions to fall too.”
Rob Weaver, director of investments at residential property crowdfunding platform Property Partner, agrees that it is now clear that the residential property market has “not fallen off a cliff post-Brexit” as some had predicted.
“Quite the opposite, these latest Halifax figures show stability and a degree of resilience,” he said.
Despite the general dip in house prices with the backdrop of uncertainty over leaving the EU, Weaver says that they continue to be supported by the structural defects in the market.
He continued: “Any fall in demand after the stamp duty hike in April has been offset by the lack of supply in the summer months. While the market has slowed to a degree since the referendum, the annual and quarterly rates of growth are positive signs for investors.
“According to the Bank of England’s chief economist, owning property is a better bet than a pension. And the government is preparing a multi-billion pound package to support house building longer term and stimulate the economy - a clear indication of the significance of the housing market to the UK’s prosperity.
“The Bank of England’s base rate cut last month has provided a much-needed confidence boost and eased some of the jitters over Brexit.”