Average UK house price falls annually for first time since 2023 – Lloyds

Sarah Coles, Head of Personal Finance at AJ Bell, said: “House prices haven’t dropped this low since last December. This isn’t a seismic shift in the property market, but a gradual change in direction like this can still ring alarm bells. The reason that property prices aren’t falling further is that sellers are refusing to cut their asking prices and buyers are biding their time, so properties are starting to sit around on the market for longer and mortgage approvals have dropped.

“The North South divide remains striking. There’s reasonable growth in the North East and North West, but prices are falling further south. London has seen prices drop for a while – and are down 1.5% in a year. However, the South East saw them fall even further, at 1.6%, and the South West and Eastern England also saw prices decline 1.2%. The malaise seems to be spreading. If the market grinds to a halt and prices remain depressed, it will make life even tougher. It’s difficult to muster enthusiasm for a purchase when you’re faced with having to pay higher monthly mortgage costs for a house that could lose value. It means more buyers are likely to sit tight.

“At that point, there’s a decent chance that the market could suffer even more. We could see more widespread falls, as sellers are forced to cut prices. Alternatively, we could see the property market stall entirely, as nobody is prepared to blink.

“However, there remains hope. If we get an easing of the global picture and lower mortgage rates, coupled with a Budget that encourages more confidence, we could see buyers come back and the market pick up. It’s a big ask, but it’s not beyond the realms of possibility.

“This is a depressing picture for home movers, but it does present an opportunity for first time buyers. Horribly high prices have made it incredibly difficult to get onto the property ladder, and if they come down off recent highs, it could bring properties within reach – especially if sellers are prepared to negotiate. The fly in the ointment is that mortgage costs are still a huge stretch, so the size of your deposit will make all the difference. It’s worth considering any help you can get, from topping up your Lifetime ISA to get a bigger bonus from the government, to asking family for help.”