Average price of a home in Britain drops 0.6% in January to £223,285, says Halifax
UK house prices fell for a second consecutive month in January as consumers struggling with shrinking disposable income put major spending decisions on hold.
The average price of a home in Britain fell 0.6% last month to £223,285, according to the mortgage lender Halifax. It followed a 0.8% drop in prices in December, and drove down annual house price growth to 2.2%, the slowest rate in six months.
Halifax’s Russell Galley said house prices fell despite a backdrop of rising employment in Britain and the government’s decision to scrap stamp duty for first time buyers on homes selling for up to £300,000.
“Although employment levels grew by 102,000 in the three months to November, household finances are still under pressure as consumer prices continue to grow faster than wages.”
“Additionally, it’s still too early to see any impact for first-time buyers from the abolition of stamp duty on purchases of up to £300,000, which was announced in the November budget.”
Household finances have come under renewed pressure over the past year, as inflation rises faster than pay. The sharp fall in the value of the pound since the Brexit vote has been the main driver behind rising inflation, as it pushes up the cost of goods and services imported from abroad.
Consumer price inflation is 3%, outpacing pay growth of 2.4%.
Jonathan Samuels, the chief executive of the property lender Octane Capital, said uncertainty over Brexit was also making consumers more cautious and predicted a “see-sawing” in house prices in 2018.
“High inflation and low economic visibility amid ongoing Brexit negotiations are holding the property market to ransom. While the lack of supply and low borrowing costs rule out a material deterioration in prices, the cost of living and caution around the UK’s exit from the EU are starting to get the upper hand,” he said.
Halifax said a backdrop of low mortgage rates and a shortage of homes on the market were preventing sharper falls in UK house prices and would support the housing market in the coming months.