House prices in the United Kingdom declined for the first time in more than a year in July, according to Halifax, and the market is expected to deteriorate further as interest rates rise and the cost-of-living squeeze tightens.

Prices, which had lately reached record highs, fell by 0.1 percent from June, when they had increased by 1.4 percent, according to Halifax.

Prices increased by 11.8 percent year on year, slower than the 12.5 percent rise in June.

The housing market is cooling following a boom fueled by the COVID-19 epidemic and the shift to working from home, which increased demand for larger houses, as well as by rock-bottom borrowing rates, which are now increasing again.

“House prices are likely to come under more pressure as those market tailwinds fade further and the headwinds of rising interest rates and increased living costs take a firmer hold,” Halifax managing director Russell Galley said to Reuters.

“Therefore a slowing of annual house price inflation still seems the most likely scenario.”

Nationwide, a rival mortgage provider, reported earlier this week that home prices climbed at the slowest monthly rate in a year in July, while Bank of England statistics showed the lowest number of new mortgage approvals in two years in June. 

The Bank of England boosted interest rates by the most since 1995 on Thursday, raising the Bank Rate to its highest level since 2008 as it strives to contain the harm caused by a jump in inflation, which is now anticipated to exceed 13 percent later this year. 

In July, London continued to have slower annual home price inflation than other areas, according to Halifax, but the 7.9 percent increase rate was the highest in almost five years.

Source: Reuters

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