The price of an average UK house fell further in September, according to the Halifax index, as the country’s house price correction continues.
The average price of a home is now £278,601, representing a 0.4 per cent fall in September, following a 1.8 per cent decrease the previous month, Halifax said.
It is the sixth consecutive monthly fall, leaving prices 4.7 per cent lower compared to a year earlier, it said.
The typical UK home price is now around the level seen early last year but around £39,000 above pre-pandemic levels, Halifax said.
Although prices have fallen in recent months, experts say the drop represents more of a slow puncture than a major correction.
In another index by Nationwide, British house prices were more than 5 per cent lower in September compared to a year earlier, matching a fall the previous month which represented the biggest annual drop since 2009.
But in month-on-month terms, prices were the same in September after a 0.8 per cent fall in August, the lender said.
It estimated the average price of a home remained unchanged at £257,808 after two months of falls.
However, both Halifax and Nationwide said recent falls in mortgage rates give reason to believe the housing market is heading for more stability.
“This was a sixth consecutive monthly fall, though the pace of decline slowed markedly compared to August,” said Kim Kinnaird, Halifax mortgages director.
“However, with base rate now likely to be at or around its peak, we are seeing fixed rate mortgages deals ease back from recent highs.
“Wage growth also remains strong, which has helped with affordability, with the house price to income ratio now at its lowest level since June 2020.”
However, on Thursday Bank of England deputy governor Ben Broadbent warned of “clear signs” that interest rate rises are dragging on the UK economy and causing unemployment to pick up.
He said economic indicators sensitive to higher interest rates, including spending on consumer durable goods and housing investment, have “weakened quite a lot”.
“There are now reasonably clear signs that monetary policy tightening is having some effect, not least in the shape of demand in the UK,” he said at the European Central Bank conference on monetary policy.
“Even in aggregate, we’ve seen weaker demand growth and the beginnings at least of some rise in unemployment.”
His comments came after the Bank of England halted its most aggressive tightening cycle in over three decades last month after seeing signs of the economy beginning to weaken.
Mr Broadbent was one of five rate-setters in the majority of the divided Monetary Policy Committee to back leaving rates at 5.25 per cent, even though inflation remains triple the Bank’s target and wages are rising rapidly.
He expects inflation to fall back to the 2 per cent target within two years and says rate rises so far are beginning to bite.