Average house price fell by 0.3 per cent in July, a fourth consecutive monthly decline, according to the Halifax.

This means property prices have dropped by 2.4 per cent on an annual basis, easing from 2.6 per cent in June.

A typical UK home now costs £285,044 against a peak of £293,992 last August.

Kim Kinnaird, the director of Halifax Mortgages, says: “In reality, prices are little changed over the last six months, with the typical property now costing £285,044, compared to £285,660 in February. 

“The pace of annual decline also slowed to 2.4 per cent in July, versus 2.6 per cent in June. These figures add to the sense of a housing market which continues to display a degree of resilience in the face of tough economic headwinds.

“In particular, we’re seeing activity amongst first-time buyers hold up relatively well, with indications some are now searching for smaller homes, to offset higher borrowing costs. 

“Conversely the buy-to-let sector appears to be under some pressure, though elevated interest rates are just one factor impacting landlords’ business models, together with considerations of future rental market reforms. It remains to be seen how many may choose to exit and what that could mean for the supply of properties available to buy.”

Kinnaird says prospects for the UK housing market remain closely linked to the performance of the wider economy. 

Several factors are providing support, notably strong wage growth, running at around 7.0 per cent annually. And she says that while the uptick in unemployment is likely to restrain that somewhat, it seems unlikely to reach levels that would trigger a sharp deterioration in conditions.

Kinnaird continues: “Expectations of further Base Rate increases from the Bank of England were tempered by a better-than- expected inflation report for June. 

“However, while there have been recent signs of borrowing costs stabilising or even falling, they will likely remain much higher than homeowners have become used to over the last decade.

“The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year. Based on our current economic assumptions, we anticipate that being a gradual rather than a precipitous decline. 

“And one that is unlikely to fully reverse the house price growth recorded over recent years, with average property prices still some £45,000 (that’s up 19 per cent) above pre-Covid levels.”