Annual house price growth across the UK has slowed to the lowest level in more than a decade, with property values in the south of England under the greatest pressure.
The lender Halifax said average prices in April were 0.1% higher than the same month a year ago, the lowest rate of growth since December 2012 and down from March’s annual growth rate of 1.6%.
Average prices fell 0.3% in April compared with a month earlier, taking the typical UK property price to £286,896. This is about £7,000 below last summer’s peak, but about £28,000 higher than two years ago.
The Halifax report showed a mixed picture for house prices in different regions of the UK.
The four regions of southern England recorded house price falls over the past year, with the south-east showing the largest dip (of 0.6%, to an average house price of £387,469), while in all other regions and nations across the UK annual price growth remained positive in April.
In the regions in the south – Greater London, eastern England, the south-east and the south-west – buyers face the most expensive average property prices, and therefore the biggest impact of higher borrowing costs after 11 successive interest rate rises by the Bank of England. London continues to have the costliest homes anywhere in the country, and the average price fell by 0.2% year on year to £538,409.
Elsewhere, the West Midlands posted the strongest annual growth of 3.1%, taking the average property price to £249,554.
Just behind were Northern Ireland with annual growth of 2.7% to £186,846, Scotland with an annual gain of 2.2% to an average £201,489, and Wales with 1% growth to £216,559.
Kim Kinnaird, the director of Halifax Mortgages, said: “House price movements over recent months have largely mirrored the short-term volatility seen in borrowing costs. The sharp fall in prices we saw at the end of last year after September’s mini-budget preceded something of a rebound in the first quarter of this year as economic conditions improved.
“The economy has proved to be resilient, with a robust labour market and consumer price inflation predicted to decelerate sharply in the coming months. Mortgage rates are now stabilising, and though they remain well above the average of recent years, this gives important certainty to would-be buyers. While the housing market as a whole remains subdued, the number of properties for sale is also slowly increasing, as sellers adapt to market conditions.”
However, she said while mortgage approvals had increased, cost of living worries “remain real for many households”, and they will weigh on consumer sentiment and ability to buy.
“Combined with the impact of higher interest rates gradually feeding through to those remortgaging their current fixed-rate deals, we should expect some further downward pressure on house prices over course of this year,” Kinnaird said.
The average five-year mortgage fix fell below 5%, to 4.97% at the start of the month, but is still roughly double where it was this time last year. The Bank of England is widely expected to raise interest rates on Thursday for a 12th consecutive time, to 4.5%. The central bank could be forced to raise interest rates to 5% this summer, Goldman Sachs has warned, as the UK struggles to bring down inflation, the highest among the G7 group of advanced economies.
Andrew Wishart, senior property economist at Capital Economics, said UK houses prices remained “remarkably resilient to the largest rise in mortgage rates since the late 1980s, down just 2% from their peak last summer.”
He added: “It is possible for the market to remain expensive for some time. But our view that mortgage rates won’t decline any further in the near term and the economy will slip into recession suggests a further drop in prices is likely.”
