UK house prices fall in January for first time since August, Halifax reveals

UK house prices fell 0.9% in January compared to a month ago to an average of £220,260, signalling a slowdown in the housing market in a post-Brexit environment.

The figures from Halifax marked the first monthly decline since August of last year and followed a 1.6% surge in December.

However, compared to the same month a year ago, house prices continued to climb, rising 5.7%. In December, prices grew an annualised 6.5%.

A shortage of properties for sale and low levels of house building have sent prices sky high, making it more difficult for first time buyers to get on the ladder.

“UK house prices continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding, and exceptionally low interest rates,” said Martin Ellis, Halifax housing economist.

“These factors are unlikely to change materially during 2017. Nonetheless, weaker economic growth and increasing pressure on spending power, along with affordability constraints, are expected to dampen housing demand, resulting in some downward pressure on annual house price growth during the year.”

Howard Archer, chief UK and European economist at IHS Global Insight, said housing market activity and prices are likely to come under mounting pressure in 2017. As inflation rises on the back of a weaker pound, Archer expects consumers’ purchasing power will deteriorate. The economist also sees the labour market softening as businesses become more wary amid Brexit.

“Additionally, housing market activity is likely to be limited in 2017 by softer consumer confidence and reduced willingness to engage in major transactions..

“Housing market activity and prices are also likely to be pressurized by stretched house prices to earnings ratios and tighter checking of prospective mortgage borrowers by lenders.”

IHS predicts house prices gains across 2017 will be “no more than 3%”.