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House prices fell 3.1 per cent in April – what does it mean for house buyers and sellers?

Britain’s biggest mortgage lender has reported the cost of the average UK home dropped by £7,000 in April, the steepest monthly fall since September 2010.  Is this a blip or the start of a slide in property values?

Is now the best time to bag a bargain with deals being agreed for under the asking price? Or should would-be buyers wait as they could pay less in a couple of months’ time? We ask a range of property experts what’s really going on.

Reporting on a month that traditionally marks the start of the spring house hunting season, Halifax said prices of the average home were down by 3.1 per cent (£7,140) in April to £220,962, following a 1.6 per cent rise the previous month. Over the last quarter, a better guide to an underlying trend, prices were 0.1 per cent lower than the previous three months.

Russell Galley, Halifax’s managing director, said housing demand had “softened” in the early months of 2018. However, he still expected annual house price rises between zero and three per cent this year.

Previous sustained falls in property prices have usually happened when rising unemployment forces people to sell their homes. But the UK labour market is performing strongly with unemployment continuing to fall and wage growth finally picking up, said Mr Galley.  

Meanwhile, Land Registry data confirms house prices have been falling in London for some time while property values in areas outside the capital are still increasing. Average house prices in the UK increased by 4.4 per cent in the year to February 2018.

House prices fall
House prices fall

Paul Preen of Lang, Town and Country estate agents in Plymouth said the latest monthly figures should be “taken with a pinch of salt.”

 “We have not seen a dip in prices and demand is strong. I don’t know where Halifax got their figures from and no doubt Nationwide will produce a report next week which contradicts it. The market is as active now as it was 18 months ago. Now is still a good time to buy because the market is being driven by mortgage rates and the cost of borrowing money is phenomenally good value, as good as it has ever been in the UK.”

“I think property prices will just stabilise. In the UK, the housing market is hinged on interest rates. Unless anything dramatic happens with interest rates, property prices will continue as they are. What we all need is an increase in property prices in line with inflation – around three per cent. The troughs and peaks we have had for last 15 to 20 years are not good for anyone.”

Gary Marples of Stevens Estate Agents in Henfield warned against reading too much into monthly figures.

He said: “I think it is a blip. You need to look at the bigger picture. Those figures were for April and could have been affected by the ‘Beast from the East’ when we had snow and people cancelled viewings. It is a very small, four-week window. Prices are at a plateau – they’re not going up or down.”

But Mr Marples said activity and listings are down for what is traditionally the busy spring buying season.  “May is normally a very busy month and it is terribly quiet. There are all sorts of reasons why people aren’t moving but we haven’t got an awful lot of property coming onto the market. If someone has to pay £40,000 in stamp duty to purchase a bigger property, they could put a nice extension on the house they’ve got for that sum.”

His advice to would-be buyers? “Get on with it and dip your toe in water because nothing is going to change in the medium term.”

Christ Schutrups, managing director of the Mortgage Hut, said: “The housing market is cooling. We have seen property prices fall in London and it’s starting to take effect elsewhere. Consumer confidence is dipping a tiny bit.”

While those selling need to be realistic on the price they can achieve, there is room to negotiate when buying a property themselves, said Mr Schutrups. “It is a merry-go-round. The only people who lose are those getting on and off.”

He added: “The bigger issue is lack of supply. A lot of house buyers are struggling to find quality stock because people are staying in their properties for longer.”