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UK house prices are falling - but Brexit may not be to blame

Tom Belger
Finance and policy reporter
A 'for sale' sign in Swindon as figures show UK property prices are falling. Photo: Dan Kitwood/Getty Images

House prices have fallen for a second month in a row in Britain, with a fall in Halifax bank’s monthly index that took analysts by surprise.

House prices were down 0.2% between June and July, compared with a rise of 0.3% predicted in a poll of economists by Reuters.

The index by Halifax and IHS Markit also recorded a lower year-on-year increase for the three months to July, down from 5.7% to 4.1%.

Brexit uncertainty has significantly cooled the UK property market since the EU referendum in 2016, and there are expectations of a crash in prices if Britain leaves without a deal in October.

Halifax highlighted HMRC figures showing sales were down 16.5% in June 2019 compared to the previous June on a seasonally adjusted basis.

But several analysts say Brexit may not be to blame for the decline in the past two months, and suggest homeowners need not be as worried as the figures might suggest.

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Russel Galley, managing director of Halifax, said the “overall trend actually remains one of comparative stability.”

He said enquiries were rising from new buyers, boosted by low interest rates and strong wage growth, despite a reported drop-off in the number of properties sold over the summer so far.

Colby Short, CEO of estate agent comparison site GetAgent, said the figures may be reported as “doom and gloom” but may not be reflective of the wider property market, given the low number of sellers.

"Are we seeing a further indictment of Brexit paralysis? Or is this a seasonal blip given that the summer months simply tend to see lower demand?” said Marc von Grundherr, managing director of London estate agent Benham and Reeves.

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A Halifax branch in Beaconsfield, Buckinghamshire. Photo: PA

Reeves added: “For the UK property market to have seen year on year growth of over 4% despite the best endeavours of our politicians to de-rail public sentiment, has to be viewed as at least resilient – perhaps even astonishing.”

Shepherd Ncube, CEO of Springbok Properties, also pointed out the national figures hide the significant gap between a slowdown in London and the south-east and the “powerhouse” of rising prices in the north.

But economist Howard Archer of consultants EY ITEM Club said Brexit would continue to hang over the market, predicting prices would not rise more than 1.5% this year.

"With Brexit due to occur on 31 October-and it currently very unclear what will happen then-uncertainty will weigh down on the economy over the next few months at least and hamper the housing market,” he said.