Halifax reported a tiny 0.1% house price fall in July’s data, but as buyers continue to outnumber sellers, is this just a normal seasonal correction?
The UK housing market is under particular scrutiny at the moment as the cost of living crisis, along with rising inflation and interest rates, have conflated to cause great speculation over what impact it will have on people’s appetite for property.
Some onlookers have understandably baulked at the latest news from Halifax that the average property price has fallen by 0.1% between June and July, amid a gloomy economic outlook.
Yet house price fluctuations are common based on seasonal appetite and activity, as many experts have pointed out. Historically, housing transactions often dip during the summer as people focus on holidays, which can cause a house price fall, before appetite returns in the autumn.
Many believe that it is simply a correction on the fast-paced transaction levels we have been experiencing over the past couple of years, which has been a major driver of spiralling house prices. Most accept that the pace of growth is likely to slow to a more typical level.
More new listings
Alongside the small house price fall, Halifax also noted that year-on-year, prices were up by 11.8% since July 2021. The average property in the UK now costs £293,221.
Property portal Rightmove saw a similar pattern in its latest indices, which showed a house price fall (on the portal) of 1.3% between June and July. It also noted a drop in buyer enquiries of 4% compared with July 2021, and a 12% increase in new listings, which also has an effect.
Commenting on this, Tony Gambrill, sales area director at Chestertons, says: “There is a clear increase in the number of properties coming onto the market this month and, at the current rate, we could see more than double the amount of listings compared to July.
“Despite this uplift in available properties, demand from London house hunters continues to outstrip supply. This means that, whilst buyers are benefiting from a larger selection of homes to choose from, vendors still very much dictate price negotiations.”
Biggest house price fall in London
On a regional basis, London took the biggest hit according to Rightmove’s data. It experienced a house price fall of 3.5% between June and July, although annually prices have still risen by 5.2%.
Some agents are advising clients to list their homes after the summer holiday season to ensure the highest buyer engagement, both in London and in other similarly high end markets elsewhere.
Jordan Yorath, partner at Monroe Estate Agents in Leeds said: “So far in August, we have been advising some clients in the higher value property sector to market their home outside of the traditional summer holiday period.
“After a prolonged period where many people’s lives were restricted in terms of holidays and travel, we felt best that clients seek to launch their properties outside of the month of August in particular, so that they could reach the maximum number of engaged buyers when they come to market.
“July was a really strong month for us, and while some might be enjoying a summer break away, we have been busy preparing for the rest of the year, with a great number of listings also ready for September onwards.”
Sector resilience still going strong
Many people looking for a solid investment option that tends to hold up well against external negative influences and tailwinds often look to bricks and mortar. People’s confidence in the sector has grown even more since Covid.
Iain McKenzie, CEO of The Guild of Property Professionals, says: “When we’ve become so accustomed to seeing house prices rocket every month it would be easy to get over excited about this unfamiliar dip.
“The truth is that the housing market has shown itself to be resilient to the wider struggles of the economy, and this decrease is likely to herald a slight cooling off in prices rather than anything more dramatic.”
