UK house prices fell for a second consecutive month in April, with Halifax cutting its annual growth estimate in half as the conflict in the Middle East continues to push up borrowing costs and dampen buyer confidence.
Halifax, part of Lloyds Banking Group, said the cost of a typical UK home dropped 0.1% in April to £299,313, following a steeper 0.5% decline in March. Annual price growth slowed to 0.4%, down from 0.8% the previous month.
Amanda Bryden, head of mortgages at Halifax, pointed directly to the conflict’s effect on energy prices and inflation expectations. “Higher energy prices have fed into inflation expectations, prompting markets to reassess the path for interest rates — a shift that has already pushed up borrowing costs for many buyers,” she said. “This understandably leads to more caution among some households, with the cost of living once again front of mind.”
The figures mark a sharp reversal from the start of the year. Prices rose 0.8% month-on-month in January and 0.3% in February, leading Halifax to forecast 1.2% annual growth as recently as that month. Both figures now look optimistic.
Mortgage rates have moved decisively higher. According to Moneyfacts, the average two-year fixed rate stood at 5.77% on Thursday, up from 4.83% at the start of March. The average five-year fix rose to 5.69% from 4.95% over the same period.
Industry observers say the pricing disconnect between buyers and sellers is the market’s most immediate problem. “Many sellers are still pricing based on expectation rather than current market reality,” said Chris Hodgkinson, managing director of House Buyer Bureau. “Homes that aren’t positioned correctly from day one are simply sitting on the market for longer, forcing sellers into larger reductions further down the line.”
The Halifax data contrasts sharply with figures published last week by Nationwide, which recorded an unexpected 3% annual price increase in April, its fourth consecutive monthly rise. The two lenders measure housing market activity differently, and the divergence has left economists with conflicting signals about where the market is headed.
