House prices fell marginally by 0.1% in July, said Halifax, the first decrease since June 2021.

This takes the price of typical UK property to £293,221.

The annual rate of growth remains in double digits but fell back to to 11.8% from 12.5% last month. However, house prices remain more than £30,000 higher than this time last year.

Regional splits

Wales showed the strongest annual growth in the UK, at 14.7% with an average property price of £222,639.

It’s closely followed by the South West of England, with annual growth of 14.3% and an average property price of £310,846.

Annual growth in Northern Ireland eased back slightly to 14.0%, with a typical home now costing £187,102.

Scotland also saw a slight slowdown in the rate of annual house price inflation, to 9.6% with homes now costing an avreage of £203,677.

London saw the slowest annual house price inflation in the UK, but the rate of 7.9% is the highest in almost five years, with the average property now costing £551,777.

Russell Galley, managing director of Halifax, said: “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. 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.”

Andrew Montlake, managing director of mortgage broker, Coreco, addded: “With a deep and lasting recession forecast, the property market now has one hell of a fight on its hands. The Halifax is right that people shouldn’t read too much into a single month’s fall, but after Thursday’s troubling forecast by the Bank of England many almost certainly will. The resilience of the jobs market will be key.

“If the predicted recession sees unemployment rise sharply, the property market will take a hit. However, even amid the apocalyptic statements from Threadneedle Street, the lack of supply is the property market’s joker, and will support prices in the tough year or two ahead. However, we may have just seen the last of annual price growth being in double digits.”