House prices fell again in October slipping 0.4%, the sharpest drop in value since February 2021

House prices continued to fall in October, dropping 0.4 per cent compared to the dip of just 0.1 per cent seen the month before, according to Halifax’s latest house price index.

It is the third decrease in the past four months, meaning the typical UK property now costs £292,598, a reduction of £1,066 down from £293,664 last month. 

Year on-year prices are still climbing, although the rate of growth is slowing.

Fall: House prices dropped 0.4% in October, down from the dip of 0.1% seen in September

Prices rose 8.3 per cent in the 12 months to October, down from 9.8 per cent in the year to September, the mortgage lender said. 

The monthly fall is the steepest drop in prices since February 2021.

Kim Kinnaird, director, Halifax Mortgages, said: ‘Though the recent period of rapid house price inflation may now be at an end, it’s important to keep this is context, with average property prices rising more than £22,000 in the past 12 months, and by almost £60,000 or 25.7 per cent over the last three years, which is significant.

‘While a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant shock as a result of the mini-budget which saw a sudden acceleration in mortgage rate increases. 

‘While it is likely that those rates have peaked for now – following the reversal of previously announced fiscal measures – it appears that recent events have encouraged those with existing mortgages to look at their options, and some would-be homebuyers to take a pause.

‘Understandably we have also seen consumer caution grow, as industry data shows mortgage approvals and demand for borrowing declining.’

The average UK house price is now £292,598 down from £293,664 last month

Kinnaird added that the combination of the ongoing cost of living crisis and mortgage affordability will continue to impact activity levels. 

Furthermore, with tax increases expected in the upcoming autumn fiscal statement the ‘economic headwinds point to a much slower period for house prices’.

However, there are still significant factors propping up house prices as housing stock remains low and employment is high. 

The extent to which a UK recession increases joblessness will likely determine how house prices fare over the coming months.

 Tom Bill, head of UK residential research at Knight Frank, said: ‘There was a sharp intake of breath in the UK housing market last month due to the impact of the mini-Budget but that doesn’t mean prices are now on a steeper downwards trajectory. 

‘We expect mortgage rates to calm down in the short-term as financial markets respond to the new government but it’s a fair assumption that house prices have peaked following growth of more than 20 per cent during the pandemic. 

‘After 13 years of ultra-low borrowing costs, anyone buying a house or re-mortgaging will recognise the ground has shifted, which is the reason we expect prices to fall back to the level they were at in summer 2021.’   

Iain McKenzie, CEO of The Guild of Property Professionals, added: ‘We are still seeing the demand for good quality housing among first-time buyers, but reduced mortgage availability and rising interest rates may cause some to sit on their deposit until the market stabilises.

‘Rental prices are still climbing for many households, and despite the changes to mortgage affordability, it still makes sense for prospective buyers to try to get their foot on the property ladder.

‘Confidence in buying will remain robust if the Government holds firm on delivering the incentives to buy.’