UK house prices fell in October at the fastest rate since early last year as the market was knocked by the fallout from former chancellor Kwasi Kwarteng’s disastrous mini-budget.
The average house price fell by 0.4% in October, according to figures from the Halifax building society.
That is the sharpest fall on Halifax’s index since February 2021 and follows a 0.1% drop in September.
This brings the annual rate of house price inflation down to 8.3% from 9.8%, and means the typical UK property now costs £292,598, down from £293,664 last month.
Average prices remain near record highs, but the recent period of rapid house price inflation may now be at an end, warned Kim Kinnaird, director at Halifax Mortgages.
Kinnaird explained that the surge in UK costs following the former chancellor's package of unfunded (and now abandoned) tax cuts was a "significant shock".
"While a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant shock as a result of the mini-budget which saw a sudden acceleration in mortgage rate increases," Kinnaird said.
"While it is likely that those rates have peaked for now – following the reversal of previously announced fiscal measures – it appears that recent events have encouraged those with existing mortgages to look at their options, and some would-be homebuyers to take a pause."
Martin Beck, chief economic advisor to the EY ITEM Club, said: “October’s fall is likely to be repeated in coming months.
“Although mortgage rates have retreated from the highs seen just after the mini-budget, they remain elevated compared to early-mid September,” he pointed out.
He expects average property prices to fall further, although forecast the decline is likely to be restricted to around 5%-10%.
Housebuilders slipped following the news with Persimmon PLC (LSE:PSN), Taylor Wimpey PLC (LSE:TW.), Barratt Developments PLC (LSE:BDEV) and Berkeley Group Holdings PLC (LSE:BKG) all lower in early trading while property website, Rightmove PLC (LSE:RMV), also headed south.