According to mortgage lender Halifax, house prices in the UK dropped unexpectedly for nearly six months in September, as the number of homes for sale this year dropped to a decade low.
The country’s largest mortgage lender said that the average price of a home in the UK dropped in September to £225,995, a reduction of 1.4% from the average reported in August. Property prices still remain 2.5% higher than they were a year ago.
City economists had anticipated month-on-month expansion of 0.2% last month.
The most recent overview of the UK housing market, taken only six months before Britain leaves the EU, indicates reduced levels of demand for homebuying amid the political uncertainty created by Brexit.
Economists responded that the picture presented by Halifax concealed some regional variations. Although Brexit property prices in London are dropping for the first time since 2009, prices elsewhere are going up.
They also warned that the Halifax house price index is more subject to change than other residential property barometers because it is done every month.
Earlier this week, the Prime Minister announced that the British government would raise the cap on the amount that local councils can borrow to build homes, which can help increase the number of homes produced by local authorities.
Many people are being priced out of the market by high average property prices relative to household incomes, which in turn is impacting the rate of Brexit property price growth. The Bank of England has also started to slowly raise interest rates, which in turn causes mortgage costs to go up.
Pantheon Macroeconomics chief UK economist Samuel Tombs said that not many British households believe that housing is a wise investment at the moment.
Mr. Tombs explained that the combination of heightened economic uncertainty and growing mortgage rates will impact demand in the months leading up to Brexit, ensuring that house price growth barely passes zero on a year-over-year basis.