According to an index Halifax has warned that house prices are falling at their fastest rate in 12 years at 2.6% which equates to around £7,500 wiped off the average price.
Halifax said that on a month-on-month basis house prices fell for the third month in a row, “albeit a modest one.”
Kim Kinnaird, director, Halifax Mortgages, said: “The average UK house price fell slightly in June, down by around £300 compared to May, with a typical property now costing £285,932.
“This was the third consecutive monthly fall, albeit a modest one.
“The annual drop of 2.6% is the largest year-on-year decrease since June 2011.
“With very little movement in house prices over recent months, this rate of decline largely reflects the impact of historically high house prices last summer – annual growth peaked at 12.5% in June 2022 – supported by the temporary stamp duty cut.
“To some extent the annual growth figure also masks the fluctuations we’ve seen in the market over the past 12 months.
“Average house prices are actually up by 1.5% (around £4,000) so far this year, with most of that growth coming in the first quarter, following the sharp fall in prices we saw at the end of last year in the aftermath of the mini-budget.
“These latest figures do suggest a degree of stability in the face of economic uncertainty, and the volume of mortgage applications held up well throughout June, particularly from first-time buyers.
“That said, the housing market remains sensitive to volatility in borrowing costs.”
Kinnaird added: “The recently announced mortgage charter provides important reassurance that mortgage holders have a range of options if they’re concerned about making repayments, and that lenders will be flexible when supporting anyone in difficulty.
“Extended terms, affordable repayment plans and alternative fixed-rate deals are among the choices for existing borrowers seeking to mitigate the impact of higher interest rates.
“With markets now forecasting a peak in bank rate of over 6%, the likelihood is that mortgage rates will remain higher for longer, and the squeeze on household finances will continue to put downward pressure on house prices over the coming year.”
Alice Haine, personal finance analyst at investment platform Bestinvest, said: “These are worrying times for first-time buyers whose carefully saved deposit may no longer be enough to secure the home they want.
“Some borrowers may consider radical solutions such as longer mortgage terms, 100% mortgages and downgrading the size and location of the property they purchase to ensure they can afford repayments.
“For others, rapidly rising borrowing costs may feel too alarming, encouraging them to shelve buying plans altogether or hold out until property prices fall further.”