According to data from mortgage lender Halifax, prices unexpectedly fell by 0.3 per cent month-on-month from August, defying economists’ predictions of continued growth.
Experts had forecast a 2.2 per cent annual increase and a monthly rise of 0.2 per cent.
The slowdown represents a significant cooling compared to the second half of 2024, when annual price growth ranged between 4 and 5 per cent.
Market observers attribute this deceleration to growing concerns about the broader economy and speculation around possible property tax increases in Finance Minister Rachel Reeves’ upcoming November budget.
Regional variations remain pronounced across the UK housing market.
London recorded minimal growth at just 0.6 per cent year-on-year, while Northern Ireland led the nation with a robust 6.5 per cent annual increase in property values.
Amanda Bryden, head of mortgages at Halifax, said she was cautiously optimistic outlook despite the weaker figures.
“Although the broader economic outlook remains uncertain, with the affordability picture gradually improving, we continue to expect modest growth through the remainder of the year,” she said.
The Halifax data contrasts somewhat with figures from rival lender Nationwide, which reported a stronger performance last week.Â
Nationwide’s data showed prices rising by 0.5 per cent in September alone, pushing their measure of annual house price inflation up to 2.2 per cent.
Market analysts are closely watching how the combination of economic uncertainty, interest rate expectations, and the upcoming budget might influence buyer behaviour in the coming months.Â
With affordability gradually improving but economic headwinds persisting, the housing market remains in a delicate balance.
“Tax rises in the budget would dent real household disposable incomes and weigh on the housing market next year.”
