UK house prices see the largest slump since 2009

The UK’s house prices have seen their biggest decline since 2009, with the average home dropping in value by 4.6% or £14,000 over the past year, Halifax reports.

Last month, prices fell 1.9% – the biggest monthly fall since November 2022.

The price falls chime with those revealed by Nationwide last week with its research showing prices had fallen by 5.2%.

The typical home now costs £279,569 but property prices still remain around £40,000 higher than they were before the onset of the COVID-19 pandemic.

Monthly drop is the steepest since last November

Kim Kinnaird, the director of Halifax Mortgages, said: “UK house prices fell again in August, with the monthly drop of 1.9% the steepest since last November, following a period of relative stability.

“It’s fair to say that house prices have proven more resilient than expected so far this year, despite higher interest rates weighing on buyer demand.

“However, there is always a lag-effect where rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs flowing through to house prices.”

She adds: “Increased volatility month-to-month is also to be expected when activity levels are lower, though overall the pace of decline remains in line with our outlook for the year as a whole.”

‘Miserable time to be selling your home’

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “It’s a miserable time to be selling your home and a worrying time to be buying, with prices falling faster than any time for 14 years.

“The average price is now down £14,000 from the peak, and with sales sluggish and buyers biding their time, it’s unlikely to be an end to price drops.

“It raises the question of whether buyers should hit pause.”

She added: “The size of the drop is likely to worry buyers that they’re getting in ahead of more falls.

“The bad news is that they can expect the environment to remain tough.

“Mortgages are still sky high, buyer demand is still miserable, and sales still nowhere near where they were a year ago.”

‘Decline will certainly spur panic amongst the nation’s homebuyers’

The managing director of Barrows and Forrester, James Forrester, said: “Such a sharp annual decline will certainly spur panic amongst the nation’s homebuyers and sellers at first glance.

“But it’s important to remember that this time last year the market was flying high at the peak of the pandemic price boom, so it would have taken a monumental spike in market activity this time around to avoid an annual decline in property values.

“It’s also important to note that August is peak silly season in the UK property market and so there is very much a seasonal influence at play here.”

Marc von Grundherr, a director of Benham and Reeves, said: “What goes up must come down.

“What we’re now seeing is the market return to normality following the sustained levels of house price growth spurred by the stamp duty holiday at the start of the pandemic.

“This decline has been intensified by additional factors such as the consistent increase in interest rates and the increased cost of borrowing, however, we don’t anticipate this drop to be the tip of the iceberg.”

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