Halifax says year-on-year drop now the steepest since the global financial crisis

House prices fell by nearly 2% in August as the impact of rising mortgages rates was felt by homebuyers, according to the latest data from the Halifax.

The mortgage lender said the average price of a home fell by 1.9%, the biggest month-on-month fall since November last year in the immediate aftermath of the mini-Budget. The drop took the mean price of a home to £279,569, down 4.6% from August last year.

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This fall marks the biggest year-on-year drop since 2009.

Prices are now £14,095 or 4.8% below the peak of prices reached in September of last year, according to the Halifax, and similar to the levels seen at the start of 2022.

The data comes after Nationwide also last week reported prices falling at their fastest annual rate for 14 years, and following a prediction from Zoopla that transactions will drop 20% overall this year from 2022 levels.

Housebuilding purchasing managers yesterday reported their ninth consecutive month of falling activity in response to the declining market.

Halifax said Southern England and Wales had seen the biggest price falls, but cautioned that despite the falls, prices remained around £40,000 above pre-pandemic levels.

Kim Kinnaird, director of Halifax Mortgages, said house prices had proven more resilient than expected up till now, despite higher interest rates, but that this may be changing. She said: “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,” adding that the overall pace of decline “remains in line with our outlook for the year as a whole”.

She said: “We do expect further downward pressure on property prices through to the end of this year and into next, in line with previous forecasts.”

Jonathan Hopper, CEO of home search firm Garrington Property Finders, said the data showed that recent falls were “no passing wobble for the property market.”

He said: “With this monthly drop, questions will be asked about the rate of descent, and whether we’re still on course for a soft landing.

“The rising cost of mortgages, and the reduced amount of money that would-be buyers can borrow, have not been sufficiently offset by falling prices.”