The housing market is showing signs of cooling, says the Halifax, as its latest index shows growing caution. 

The lender says that while house prices climbed again last month, with prices up 10.5 per cent over the past year, this was slowest rate of growth since the start of the year.

Halifax says house prices have now climbed for 11 consecutive months but managing director Russell Galley cautions: “Despite the very real cost of living pressures some people are experiencing, the imbalance between supply and demand for properties remains the primary reason driving the continued climb in house prices,” said Russell Galley, managing director at Halifax. However, the housing market has begun to show signs of cooling. Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it’s likely activity will start to slow,.””

And he adds: “With overall buying demand down compared to last year, we may be past the peak sellers’ market.”

Galley also says the market is differentiating between property types. “Compared to May last year, you’d need around £10,000 more to buy a flat, but an additional £50,000 for a detached home. This clearly creates a knock-on effect for those looking to make their first home move, as the rungs on the housing ladder have become increasingly wider” he suggests.

Lettings and sales agent Jeremy Leaf, a former residential chair at the Royal Institution of Chartered Surveyors, says: “The cost of living crisis and successive interest rate rises are finally having an impact on the housing market. Prices are still rising but not as rapidly as they were just a few months ago and activity is cooling.”

But Leaf insists a major correction is unlikely while housing stock remains low.

Garrington Property Fingers chief executive Jonathan Hopper comments: “Despite double-digits dominating this index for four months on the trot, the property market is slowing and some people are having a hard time accepting it. Both net mortgage borrowing and approvals have slumped recently. It’s a big wake-up call for a frothy housing market two years in the making that we’re seeing the last days of foam.

“The market became detached from reality two years ago and now buyers have started to be much more careful about making sure the fundamentals of a property deal add up. They can sense change is in the air and know that the economy is likely to be in a very different place in 12 months’ time. After such a blistering run, that goes for the property market too.”