Halifax index

First fall in price of Scottish homes for three years

For sale, sold, homes, housing, property
Prices have dipped in Scotland (pic: Terry Murden)

Prices of homes in Scotland have seen the first annual contraction in the last three years, according to new data from Halifax bank. 

The average property was valued at £201,774 in June, down on the year by 0.1%.

Average house prices are now falling on an annual basis in most parts of the UK, according to the Halifax House Price Index.

The South of England has seen the most downward pressure. The annual fall in the South East of 3% was the largest since July 2011, with the average house price now £384,106.

London recorded an annual decline of 2.6%, leaving the average property price at £533,057 and marking its weakest performance since October 2009. Prices have dropped by around £15,000 over the last year. 

Prices in Wales saw their first annual fall since March 2013 with a drop of 1.8% to an average of £215,183.

The only areas where prices are rising are the West Midlands, Yorkshire & Humberside and Northern Ireland. 

Nathan Emerson, CEO of Propertymark, said: “It is inevitable that people’s finances are going to be impacted by rising interest rates, and there is a higher chance of a fall through in a sale due to the changes in buyers’ finances.

“However, serious buyers and sellers are rightly putting their confidence in the market and the majority are successfully and affordably moving home.

“Negotiations being made on properties are allowing wiggle room and bringing down the overall cost from the pandemic house price boom which was desperately needed as they were previously unrealistic and unsustainable.”

The EY ITEM Club thinks that resilience will likely fade. It says that the rise in mortgage rates over the last month, if sustained, will increase the challenges faced by those renegotiating fixed rate mortgages and could, in theory, prompt a bigger fall in prices than the 10% peak-to-trough decline in values the EY ITEM Club expects. 

However, the EY ITEM Club thinks a serious house price correction is still unlikely and that an improving inflation outlook means market expectations that the Bank of England will raise rates to 6.5% look too pessimistic.

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