UK house prices fall for first time since June, according to Halifax

The squeeze on wages and uncertainty over the economy continue to weigh on the housing market

Prices are likely to be supported by the ongoing shortage of properties (PA)

UK house prices fell in December, once again marred by uncertainty surrounding Brexit, according to Halifax.

Between November and December house prices fell by 0.6 per cent, the first fall since June last year, the bank said on Monday.

Prices in the last three months of 2017 were 2.7 per cent higher than in the same three-month period of 2016. That marked a significant slowdown from the 3.9 per cent rise recorded in the three months to the end of November compared to the equivalent period in the previous year.

The average UK house price at the end of December was £225,021.

City of London analysts had pencilled in a 0.3 per cent monthly rise and a 3.3 per cent annual expansion in prices.

“As we’d anticipated, the housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchase all remained flat,” said Russell Galley, managing director of Halifax Community Bank.

“This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy,” he added.

Inflation surpassed 3 per cent for the first time in years at the end of 2017, fuelled by a dramatic fall in the value of the pound in the immediate aftermath of June 2016’s Brexit vote, while wage growth has stagnated, squeezing disposable incomes.

Last week, Nationwide said that property prices grew by just 2.6 per cent across the country in 2017, compared to growth of 4.5 per cent in 2016.

The building society at the time said that London was the weakest performing region for the first time since 2004, with house prices falling 0.5 per cent year-on-year.

Despite fears of a downward spiral in property prices, most experts believe the chronic under-supply of housing combined with low interest rates means a major downturn or collapse is unlikely.

“Nationally house prices in 2018 are likely to be supported by the ongoing shortage of properties for sale, low levels of house building, high employment and a continuation of low interest rates making mortgage servicing affordable in relative terms, said Mr Galley.

Halifax said that it expects annual price growth to sit between 0 and 3 per cent by the end of the year.

“The slow down of price growth last year won’t have been welcomed by existing homeowners and buy-to-let landlords. But for those looking to get on the property ladder, it’s good news,” said Ishaan Malhi, chief executive and founder of online mortgage broker Trussle.

“With the continued pressure on household incomes, it's unlikely that we'll see significant growth in prices this year, so 2018 could be a good time to buy for those that already have some savings set aside,” he added.