The UK housing market is witnessing its biggest annual drop in 12 years, according to Halifax’s latest House Price Index (HPI). Overall house prices decreased by 2.6% in the past year, marking the most significant fall since 2011. This drop is most evident in the South of England, where South East and London property prices have fallen by 3% and 2.6% respectively.

The average price for properties in the UK now stands at £285,932, an £8,000 drop from the peak recorded in August 2022. While new-build properties still experienced a 1.9% year-on-year increase, all other property types have seen declines. Flats and terraced homes have been hit the hardest, with price falls of 3.1% and 2.5%.

Commenting on the trend, Sarah Coles, head of personal finance at Hargreaves Lansdown, stated, “The stark annual figures we’re seeing owe more to the price rocketing 12 months earlier than to any major changes during the month itself.” She warned that the recent rise in mortgage rates would act as a “lead weight” on prices, potentially causing more drastic drops in the weeks to come.

Despite this, the resilience of the property market has been somewhat surprising given the sharp fall. Steve Griffiths, Chief Commercial Officer at The Mortgage Lender, noted that the monthly prices remained relatively steady, which should instil positivity amongst buyers and sellers.

Jonathan Hopper, CEO of Garrington Property Finders, echoed Griffiths’ sentiments, stating that despite the average home losing £7,500 in value from the previous year, it has still increased by £4,000 since the start of 2023. He attributed the surging cost of mortgages as a contributing factor to the reduced number of homes being sold, but suggested that this was not necessarily affecting the prices that people are willing to pay.

Managing Director at national estate agent group Fine & Country, Nicky Stevenson, claimed that sensibly priced properties continue to attract high demand, with overall prices up £4,000 over the year thus far, indicating the market’s resilience even in tougher economic conditions.

Lastly, Nathan Emerson, CEO of Propertymark, emphasised the inevitability of finances being impacted by the rising interest rates and suggested a higher chance of sale failures due to changes in buyers’ finances. However, he also acknowledged that serious buyers and sellers are successfully and affordably moving home, suggesting that the current negotiations on properties are leading to more sustainable prices after the pandemic house price boom.