Published last Friday, the Halifax house price index for July showed a tiny 0.1% decrease in house prices and an easing in the annual rate of growth to 11.8%.

A typical UK property now costs £293,221, down a mere £365 from the previous month’s record high.

With the property market jittery in the face of rising interest rates and growing economic headwinds, the insignificance in real terms of the latest Halifax figures did nothing to dispel the notion that the extraordinary behaviour of the market in the last couple of years may be about to moderate.

“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,” said Russell Galley, MD of the Halifax.

Industry reaction

Nicholas Finn, Managing Director of Garrington Property Finders:

“The market may finally be showing signs the balance of power has shifted and its rally may be heading for the buffers.

“The property market has remained remarkably unfazed by the cost of living crisis throughout this year but it couldn’t last. The Bank of England is effectively telling buyers they can count on a recession next year and this changes everything.

Anthony Codling, CEO of Twindig:

“As the saying goes one swallow does not make a summer, so one month with a marginal house price decline does not signify a house market crash.

“The key housing market lead indicator, mortgage approvals, has fallen for the last five months in a row, which implies that housing market activity is easing and with the cost of living increases and mortgage and interest rates rising, it is perhaps not surprising that house prices will come under some pressure from these wider market headwinds.”

Tom Bill, head of UK residential research at Knight Frank:

“Negligible monthly declines in house price growth will get steeper. Mortgages have become noticeably more expensive in recent months, which will dampen demand as cheaper offers made earlier this year expire and people roll off fixed-rate deals.

“At the same time, supply has built as the distortions of the pandemic and stamp duty holiday fade, which will put downwards pressure on prices.

“The Bank of England’s latest set of economic predictions will impact sentiment, as they did in May, but the fundamentals of the property and labour market are strong and we would expect double-digit annual growth to become single-digit growth by the end of the year.”

Simon Gerrard, Managing Director of Martyn Gerrard Estate Agents and Abbeytown Ltd:

“The most important word in the housing market is affordability and, what these figures don’t show, is it’s falling for the overwhelming majority of people.

“Buyers are being forced to drink a lethal cocktail of spiralling household bills and interest rate hikes which, put simply, reduces what they can afford.

“The ongoing under-supply of housing is the only thing that’s underpinning prices – but if interest rates reach anywhere near 7%, as widely predicted under a Liz Truss government, everything changes.”