UK house prices posted their largest monthly drop in almost eight years in April in the latest sign the housing market is weakening, according to the country’s biggest mortgage lender.
The 3.1% drop, the biggest since September 2010, knocked £7,140 off the average price of a home to £220,962 last month, said Halifax, which is part of Lloyds Banking Group.
Halifax said housing demand had softened since the start of the year, with both mortgage approvals and completed home sales edging down. The number of homes being put on the market is also low.
What lies beneath: the subterranean secrets of London’s super-rich
Prices are unlikely to collapse, however, as the labour market remains strong, with unemployment continuing to fall and wage growth finally picking up.
Russell Galley, the Halifax managing director, said the strong job market should help to ease pressure on household finances, and is expecting annual price growth of zero to 3% this year.
Values dipped across the UK for the third quarter in a row, falling 0.1% between February and April, compared with declines of 0.1% and 0.7% in the two previous three-month periods, according to Halifax.
The annual growth rate fell to 2.2% in the past three months, from 2.7% in the three months to March.
Halifax said both the quarterly and annual rates had fallen since reaching a peak last autumn, with these measures providing a better indication of the underlying trend than the monthly change. City analysts say the monthly Halifax figures tend to be more volatile than other surveys.
House prices have been falling in London for some time, especially in wealthier areas, while values in some areas outside the capital are still rising. Recent regional figures from Halifax showed the price of a typical house in London was £430,749 between January and March, the lowest since the end of 2015.
Jeremy Leaf, a north London estate agent, said the latest figures were disappointing.
“We are entering what is supposed to be the busy spring buying season, which tends to set the tone for the rest of the year,” he said.
“More recently, activity and listings have picked up but we are finding the market still quite sensitive and only those prepared to negotiate hard are moving on.”
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said: “Looking ahead, consumers’ low confidence and modest rises in mortgage rates suggest that demand will continue to weaken.
“Prices will fall rapidly, though, only when a large proportion of homeowners are forced to sell up. With unemployment and borrowing costs low and credit freely available, few people are being forced to sell their homes quickly. A period of broadly flat house prices, therefore, remains the most likely outcome.”