House prices fall for second consecutive month as market stalls

HOUSE prices dropped 1.4pc between August and September, marking the second consecutive monthly decline and the largest fall since April in a sign that the property market is continuing to cool down.

The average price of a property was £225,995 in September, down from £229,284 in August, according to the latest data from mortgage lender Halifax.

Compared to a year earlier, house prices climbed 2.5pc last month, although this rate of growth was slower than the 3.7pc year-on-year increase recorded in August.

The number of mortgage approvals increased slightly in August as well, according to figures from the Bank of England, to 66,440 from 65,156 in July, which is close to the average over the past five years.

Russell Galley of Halifax said the property market, although cooling, was being supported by a lack of supply and availability of cheap debt.

“The annual rate of growth rate of 2.5pc in September is near the top of our forecast range of 0 to 3pc for 2018, as a low supply of new homes and existing properties for sale, combined with historically low mortgage rates and a high employment rate, continue to support house prices,” he said.

The housing market has slowed since the EU referendum in 2016, and many economists predicted growth would flatline in 2018.

The slowdown in the capital has been particularly sharp, although London property remains the most expensive in the country. Some of the city’s most exclusive boroughs have suffered double-digit declines.

In June, prices in the City of London fell 23.8pc compared to the year before, while in Kensington and Chelsea they dropped 13.9pc and in Westminster 12.1pc, according to data from the Office for National Statistics and the Land Registry.

Hansen Lu, of Capital Economics, said he expected the market to remain subdued as high prices relative to incomes shut out many buyers.

“There are few reasons to expect house price inflation to accelerate,” he said. “We don’t expect those factors to change any time soon.”

Halifax’s house price index, established in 1983, is based on homes bought with mortgages and excludes council house sales, shared ownership and help-to-buy schemes.