House prices tumble again as buyers face a squeeze
More signs of a deflating property market emerged on Wednesday as prices fell for the second month in a row for the first time since the Brexit vote, according to lender Halifax.
Average prices fell 0.6% in January on the back of a 0.8% decline in December, the first time house prices have marked successive monthly declines since July and August 2016.
In annual terms house prices are 2.2% ahead of a year earlier, which is the weakest growth since last July.
The latest signs of weakness, which follow recent stronger signals from the Nationwide benchmark, come after the Bank of England’s first rate rise in a decade in November.
Market speculation is mounting that policymakers could move again in May.
Although Halifax says that prices are being supported by a lack of homes for sale, potential buyers are facing a squeeze on real incomes, with inflation still higher than wage growth.
Chancellor Philip Hammond abolished stamp duty for first-time buyers on property up to £300,000 in November’s budget but Halifax’s Russell Galley, said “it’s still too early to see any impact” on house prices.
Mortgage approvals for new house purchases have also dropped sharply since the rate rise, putting more pressure on the market.
Capital Economics economist Hansen Lu, who predicts house price growth of 2% this year, said: “There is little sign of any upward momentum in today’s data.”
Howard Archer, chief economic adviser to the EY Item Club, said: “Confidence is fragile and appreciable caution persists over engaging in major transactions. Potential house buyers also look highly likely to face further interest rate hikes in 2018.”
The Halifax gloom followed research from LonRes showing homes in London’s most exclusive postcodes sold at an average 10% below their original asking price.
