UK house prices fall in August, Halifax finds

UK house price dropped last month with annual inflation slowing to its lowest level in almost three years, according to Halifax's seasonally adjusted index, although this contrasted with other industry data.

House prices dropped 0.2% month-on-month in August after dropping 1.1% in July.

In the three months to August prices were 0.7% higher than in the preceding quarter; down from 1.5% in July.

The annual rate of growth therefore fell to 6.9%, down from the 8.4% in July to the lowest level since October 2013.

The average house price fell 0.35% to £213,930 from £214,678 a month ago, down 1.3% from June's £216,823.

“House price growth continued the trend of the past few months in August with a further moderation in both the annual and quarterly rates of increase," said Halifax housing economist Martin Ellis, adding that there were signs of a softening in sales activity.

“Increasing difficulties in purchasing a home as house prices continued to increase more quickly than earnings were expected to constrain demand, curbing house price growth.”

Economist Howard Archer at IHS Markit noted that the Halifax data contrasted with Nationwide's findings of a 0.6% month-on-month rise in August after an increase of 0.5% in July.

"With the economy currently showing resilience following June’s Brexit vote, we now expect house prices to be essentially flat over the final months of 2016 - rather than fall by around 3%.

"However, we still believe that a dip in house prices is likely in 2017, probably by around 3-5%."

Jeremy Leaf, former chairman of the Royal Institution for Chartered Surveyors (RICS) and now a London estate agent, observed that on the ground, the industry was not finding a huge change in prices, "just a determination for buyers and sellers to get on with moving but at more realistic price levels".

"The good news for homeowners is that the situation could have been much worse given the fact that these figures reflect the period following the referendum," he said.

"Of bigger concern is whether there is the confidence among developers to take on debt for longer-term supply. We hope that the Bank of England has these factors in mind when making an interest rate decision this month and formulating other polices over the next few months."