UK house prices fell by 0.5% in Q3 2016 – the first quarterly decline seen in four years, Halifax’s House Price Index has revealed.
IHS Markit, which acts as administrator for the index, said London “stood out as the regional underperformer”, where prices fell by 2.5% – the first reduction seen in the capital in six years.
Prices in Yorkshire and the Humber also dropped by 3.9%, as five in 12 UK regions saw house price falls.
Chris Williamson, chief business economist at IHS Markit, largely attributed the falls to Brexit.
He said: “The UK’s vote to leave the EU has been accompanied by a clear cooling of the housing market.
“Average prices fell in the three months to September, in marked contrast to the robust growth seen in the first half of the year, registering the first quarterly decline in four years.
“Sentiment among homeowners regarding property values slumped in July but has since rallied somewhat, though remains weaker than at any time since the height of the eurozone debt crisis in 2012.”
He added: “This time, it’s ‘Brexit’ rather than ‘Grexit’ that has caused anxiety to spike in the housing market, so the future trajectory of prices will be very much determined by which path the government decides to choose in taking the country away from the EU, and how bumpy the negotiating route is.
“Any negative impact from Brexit worries will be mitigated by strong fundamentals, including a shortage of housing, high employment and record low interest rates, but IHS Markit’s base scenario is one whereby prices fall by 3% in 2017.”