Home sales and mortgage approvals are on the up, with only a small month-on-month price decline across the UK housing market of -0.3%. 

The UK property market continues to show signs of stability, with average house prices seeing “little change” over the past six months, according to the latest house price index from Halifax.


July’s figures showed that prices had declined by -2.4% in July compared with 2022’s results, bringing the average property value to £285,044. However, as the report notes, average house prices remain around 19% (or £45,000) higher than pre-pandemic levels, and the current dip is not expected to be enough to erode this level of growth.


The index also showed that the rate of price falls has declined in the UK housing market on a monthly basis, from a slightly larger -2.6% fall in June’s figures. Halifax points out that, while prices are going down, each monthly decrease has been by less than -0.5%.


Transaction levels across the UK housing market have also begun to show more positive signs of resilience, with the report pointing out that HMRC’s latest data from June recorded an increase in the number of home sales completed.


“UK seasonally adjusted (SA) residential transactions in June 2023 totalled 85,870 – up by 6.1% from May’s figure of 80,960 (up 28.3% on a non-SA basis),” notes the report. However, volumes are still down on July last year by around -15.4%.


Meanwhile, mortgage approvals also saw a month-on-month rise, according to the latest statistics from the Bank of England. The number of mortgages used to finance UK housing purchases increased by 6.9% to 54,662 in June, although annually the figure was down by 13.5%.

The UK housing market outlook

With the economic landscape remaining uncertain, it is difficult to tell how the UK housing sector will perform over the coming months. However, the report pointed out some positive indications in its latest index.


Commenting on the figures, Kim Kinnaird, director of Halifax Mortgages, said: “We’re seeing activity amongst first-time buyers hold up relatively well, with indications some are now searching for smaller homes, to offset higher borrowing costs.”


She added that the UK housing market is very much linked to the wider economy, being strongly influenced by wage growth (currently around +7% annually) and low unemployment levels.


“Expectations of further base rate increases from the Bank of England were tempered by a better-than expected inflation report for June. However, while there have been recent signs of borrowing costs stabilising or even falling, they will likely remain much higher than homeowners have become used to over the last decade.


“The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year.


“Based on our current economic assumptions, we anticipate that being a gradual rather than a precipitous decline. And one that is unlikely to fully reverse the house price growth recorded over recent years, with average property prices still some £45,000 (+19%) above pre-Covid levels.”

Interest rates to peak?

Commenting on the latest figures from Halifax, Nathan Emerson, CEO of Propertymark, made a similar point about looking at the current situation in light of the drastic house price rises of recent years.


“Even though house prices have fallen year-on-year, this does not compare to the dramatic price rises that we experienced last year,” he said. “As house prices begin to steady, and with recent rises in wages, houses are becoming more affordable while equity is remaining stable. 

“After recent positive inflation news bringing the potential for a peak in interest rates sooner than previously expected, there is also some hope that fixed mortgage rates will start to fall.


“Even as they remain high compared to recent standards, buyers are able to negotiate on price and come to a middle ground with sellers still able to make a healthy gain on the final sale price.”


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