According to the Halifax, house prices fell for a fifth straight month in August. A 1.9 percent monthly decline was significantly steeper than the market consensus and the sharpest since November 2022. Following a slightly larger revised 0.4 percent drop in July, the annual inflation rate declined from minus 2.5 percent to minus 4.6 percent. However, average prices remain around £40,000 above their pre-pandemic levels.

The quarterly change, the best guide to underlying developments, now stands at minus 1.2 percent, its weakest print since the three months to February. Regionally, prices were lower across the board with the South East (minus 5.0 percent) again recording the steepest annual drop. With market activity cooling, the Halifax expects house prices to fall further into 2024 but still sees a gradual fall rather than a precipitous slide.

Today's update puts the UK ECDI and ECDI-P at minus 18 and minus 5 respectively, both measures showing economic activity in general running slightly behind market expectations.

Prices are expected to dip a monthly 0.1 percent after a 0.3 percent fall in July.

The Halifax House Price Index (HPI) is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and the basic methodology remain unchanged. However, in May 2020, the annual growth measure was changed from the average of the last three months to just the latest month.

Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.