House prices in the UK fell by 0.1% in July, according to the latest Halifax House Price Index, the first decrease since June 2021.

This came as the annual rate of house price growth slowed to 11.8% in July, down from 12.5% the previous month.

Halifax’s data has indicated that the average price of a home in the UK now stands at £293,221, down £365 from the previous month’s record high. Prices still remain more than £30,000 higher than this time last year.

The index also indicated that first-time buyer annual inflation saw a large drop to 10.7% in July, from 12.4% in June, and continues to be outstripped by price rises seen for home movers – 12.0% in July, down from 12.5%.

Halifax also suggested that it remains the case that price gains for bigger houses are noticeably outpacing those for smaller homes. The price of a detached house has leapt by £60,860 (15.1%) over the last year, compared to £11,962 (7.7%) for flats.

“While we shouldn’t read too much into any single month, especially as the fall is only fractional, a slowdown in annual house price growth has been expected for some time,” commented Halifax managing director, Russell Galley.

“Leading indicators of the housing market have recently shown a softening of activity, while rising borrowing costs are adding to the squeeze on household budgets against a backdrop of exceptionally high house price-to-income ratios.

“That said, some of the drivers of the buoyant market we’ve seen over recent years – such as extra funds saved during the pandemic, fundamental changes in how people use their homes, and investment demand, still remain evident. The extremely short supply of homes for sale is also a significant long-term challenge but serves to underpin high property prices.

“Looking ahead, house prices are likely to come under more pressure as those market tailwinds fade further and the headwinds of rising interest rates and increased living costs take a firmer hold. Therefore a slowing of annual house price inflation still seems the most likely scenario.”

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