The average UK house price fell by 0.4 per cent annually in August, according to Lloyds
First-time buyers have been issued a warning(Image: Getty Images)
Property experts have issued a warning to first-time buyers as house prices have fallen for the first time in three years.
The typical UK property value dropped on an annual basis in August, representing the first year-on-year decline since November 2023, new figures have revealed.
Lloyds’ index showed an average annual reduction of 0.4 per cent in house prices during August. Property values decreased by 0.2 per cent compared with the previous month, after a 0.1 per cent monthly fall in July.
The average house price across the UK reached £298,468 in August.
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Andrew Asaam, mortgages director at Lloyds, said: “The average property now costs £298,468, marking the first annual fall in house prices since November 2023.
“Despite that, prices are still marginally up (a 0.2 per cent increase) since the start of the year.
“The housing market has faced a more difficult backdrop in recent months, with the impact of global events on inflation and borrowing costs creating greater economic uncertainty.
“What we’re not seeing is a rush of homeowners cutting prices. But more are choosing to sit tight, with sellers reluctant to accept offers they feel are too low, while some buyers are waiting to see how conditions develop.”
He added: “Average house prices remain around 25 per cent higher than they were at the end of 2019, despite the substantial increase to interest rates seen over recent years.”
Price increases continue to face headwinds throughout much of southern England, reflecting the heightened affordability pressures stemming from higher average property values, the bank noted.
Looking to the future, Mr Asaam commented: “We expect the market to remain fairly subdued in the months ahead, but this will likely only have a limited impact on house prices.
“While affordability remains a challenge, wages continue to grow and employment has held up better than many anticipated. This will help to support demand from those who need or want to move.”
Warnings have now been issued to first-time buyers who are trying to get a foot on the property ladder during this time.
Ian Futcher, a financial planner at wealth manager Quilter, commented: “Clearly, stretched affordability and an uncertain economic background has had a negative impact on house prices and, unfortunately, recent volatility in bond markets has the potential to put further pressure on mortgage rates.
“Swap rates have risen sharply in recent days and some lenders have already begun adjusting pricing in response.
“For first-time buyers who have spent months building a deposit and carefully calculating what they can afford, sudden shifts in mortgage rates can pull the rug from under their feet just as they are preparing to make a move.”
Sarah Coles, head of personal finance at AJ Bell, suggested the market may present possibilities for certain first-time purchasers.
She explained: “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.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “Lenders are working hard to offer solutions to those trying to get on the ladder for the first time.”
Nicky Stevenson, managing director of Fine & Country, observed: “In a market where buyers have more choice and are increasingly payment-conscious, an ambitious asking price can quickly become a barrier to securing a deal.
“Sellers who price realistically from the outset are much more likely to capture the attention of the buyers who are ready to act.”
Here are the average house prices in each region, alongside the annual percentage change, according to Lloyds:
East Midlands, £244,959, minus 0.2%.
Eastern England, £331,410, minus 1.2%.
London, £534,177, minus 1.5%.
North East, £184,370, 2.7%.
North West, £248,675, 2.0%.
Northern Ireland, £231,245, 6.9%.
Scotland, £223,437, 3.5%.
South East, £381,729, minus 1.6%.
South West £298,807, minus 1.2%.
Wales, £230,282, 0.6%.
West Midlands, £260,286, 0.0%.
Yorkshire and the Humber, £217,085, minus 0.3%.
