House prices took another tumble in August, falling by 4.6 per cent compared to the same month last year, the Halifax said. According to its <a href="https://www.thenationalnews.com/world/uk-news/2023/08/07/uk-house-prices-fall-24-in-july/" target="_blank">House Price Index</a>, the average house cost £279,569 ($349,000) in August, down by about £5,000 since July, a monthly fall of 1.9 per cent and the steepest monthly decline since November last year. The annual figure was the biggest fall in 14 years, and house prices are now “back to the level seen at the start of last year”, the Halifax said. Halifax Mortgages director Kim Kinnaird said: “It’s fair to say that house prices have proven more resilient than expected so far this year, despite higher interest rates weighing on buyer demand. “However, there is always a lag-effect where rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs flowing through to house prices. “Increased volatility month-to-month is also to be expected when activity levels are lower, though overall the pace of decline remains in line with our outlook for the year as a whole.” While the Halifax expects further falls for the rest of this year and into 2024, it noted that prices are still about £40,000, or 17 per cent, above pre-pandemic levels. Comments from the <a href="https://www.thenationalnews.com/world/uk-news/2023/09/06/uk-much-nearer-to-peak-interest-rates-bank-of-england-governor-says/" target="_blank">Bank of England governor Andrew Bailey</a> yesterday that interest rates may be near their peak will be of little comfort to home buyers, analysts said. “The reality is that mortgage rates of today are still significantly higher than the lows seen in 2021 before the Bank of England began its aggressive rate hiking cycle to curb rampant inflation in December of that year,” said Alice Haine, personal finance analyst at Bestinvest. “It means improving mortgage rates and falling inflation may do little to soften the affordability challenge for new and existing borrowers, who must prove to lenders they can comfortably meet higher repayment levels.” The Halifax's numbers mirror those of the <a href="https://www.thenationalnews.com/world/uk-news/2023/09/01/uk-house-prices-drop-at-fastest-rate-in-14-years/" target="_blank">Nationwide building society</a> last week, which showed a 5.3 per cent fall in annual house prices in August – again, the steepest drop in 14 years. Taken together, the surveys indicate that the UK housing market is now roughly halfway to the 10 per cent decline that was forecast by economists. “With the continued squeeze on household budgets, an estimated 35 per cent of people’s take-home pay is now being diverted to cover mortgage repayments,” said James Briggs from the mortgage lender Together. “This may trigger further issues later this year and lead to more subdued activity.” London remains the most expensive place in the UK to purchase a home, with an average property price of £529,814, the Halifax said. But with a 4.1 per cent fall in prices over the last year, the capital has experienced the largest fall of any UK region in cash terms, at £22,777.