House prices in the UK witnessed their steepest annual price drop in 14 years during August, according to new data from The Halifax.
The lending giant said it is happening at a time when the impact of escalating mortgage rates is reverberating across the housing market.
A 4.6% decline in property values in the year leading up to the end of August – marking an average price reduction of £14,000 – has been noted.
However, this drop is in comparison to the record high property prices recorded during the same period last summer.
This brings the cost of the average home in the UK to £279,560.
More price falls predicted
The Halifax foresees additional price falls in the coming months, citing a 1.9% decrease in house prices between July and August alone.
Kim Kinnaird, director of mortgages at The Halifax said: “We may now be seeing a greater impact from higher mortgage costs flowing through to house prices.”
Buyers will gradually adjust their comfort level with mortgage costs as the market seeks a new equilibrium, surpassing the range observed in the past 15 years.
As of December 2021, the Bank of England has implemented 14 consecutive interest rate hikes in an effort to curb increasing consumer prices in the UK. Currently, the bank’s base rate stands at 5.25%.
Biggest house price drop in London
The Nationwide reported a 5.3% drop in house prices for the year ending in August, marking the largest annual decline since 2009.
The average rate on a two-year fixed rate mortgage is now 6.67%, according to the financial information service Moneyfacts.
The lender said prices had fallen all over UK, with the biggest drop in London, although the capital remains the most expensive place to buy in the UK.