House prices in the UK continued their decline in September, marking the sixth consecutive monthly fall, but the pace of the decline slowed, according to the Halifax House Price Index.

The average house price dropped by 0.4% in September, a decrease from the 1.8% decline observed in August. On an annual basis, prices fell by 4.7%, which was slightly less than the 4.5% drop in August.

However, when compared to March 2020, prices remained £39,400 higher.

The average cost of a home in the UK is now £278,601, a decrease of around £1,200 from the previous month.

Kim Kinnaird, director of Halifax Mortgages, noted that the housing market is currently quieter than usual, with lower levels of new instructions to sell homes and agreed sales. High interest rates, currently at 5.25%, have made potential borrowers hesitant to take out mortgages to assess affordability.

As a result, homeowners are becoming more realistic about their target selling prices, as the market increasingly favors buyers.

Kinnaird also mentioned that fixed-rate mortgage deals are starting to ease back from their recent highs, and wage growth remains strong, which has helped with affordability. The house price to income ratio reached its lowest level since June 2020, with a ratio of 6.2 in September compared to 6.3 in August.

Many economists and financial markets anticipate that the Base Rate will remain elevated for a longer period, with significant rate cuts unlikely until inflation approaches the Bank of England's two percent target. These factors are expected to continue to limit buyer demand and exert downward pressure on house prices into the next year.