UK house prices have fallen by 4.6% year-on-year in August, the largest annual decline since 2009, the Halifax house price index (HPI) has found.

The high street lender has said that although the fall is sizeable, house prices did reach a record high in the summer of 2022.

Prices also fell by 1.9% month-on-month, the largest monthly drop since November 2022.

Currently, the average house price in the UK stands at £279,569, down by £14,000 in the past year.

However, the average price remains around £40,000 above pre-pandemic levels.

All UK nations and the nine regions in England registered a decline in house prices over the last year, with northern locations showing more resilience than areas in the south.

House prices in the south east have fallen by 5% in the past year, with the average price currently standing at £379,565.

London also has seen a sizeable drop in house prices year-on-year, dropping by 4.1% in the past 12 months. The capital recorded the largest reduction of any region in cash terms, with the average house price standing at £529,814, a decline of £22,777 year-on-year.

Wales has also seen a drop of 4.7% in property prices over the past year, despite recording some of the biggest gains in property prices during the pandemic-driven race for space. Scotland has proven to be the most resilient nation in terms of house prices, recording a drop of just 0.6% in the past 12 months.

Director at Halifax Mortgages, Kim Kinnaird, said: “It’s fair to say that house prices have proven more resilient than expected so far this year, despite higher interest rates weighing on buyer demand. However, there is always a lag-effect where rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs flowing through to house prices. Increased volatility month-to-month is also to be expected when activity levels are lower, though overall the pace of decline remains in line with our outlook for the year as a whole.

“We do expect further downward pressure on property prices through to the end of this year and into next, in line with previous forecasts. While any drop won’t be welcomed by current homeowners, it’s important to remember that prices remain some £40,000 (+17%) above pre-pandemic levels.”

Head of personal finance at Hargreaves Lansdown, Sarah Coles, said that it is a “miserable time” to be selling a home and a “worrying time” to be buying, with prices falling faster than any time for 14 years.

“Higher mortgages have an immediate impact on buyers, and while they have inched down from the peak, rates aren’t going anywhere in a hurry,” Coles commented. “It’s not just the buyers we have to worry about either.

“There’s also the insidious creep of remortgages as people come to the end of the fixed rate deal. The Resolution Foundation showed the average mortgage rate held at the start of 2022 was 2%, and is expected to peak at 4.8% at the end of 2027, but only half of that has filtered through into mortgages so far. It means house price weakness could have a long tail.”

Personal finance analyst at Bestinvest, Alice Haine, concluded: “For the 800,000 homeowners with fixed rate mortgages expiring in the second half of this year, along with the 1.6 million homeowners with products expiring in 2024, the remortgage nightmare will feel very real as they must absorb significantly higher repayments.

“Locking in a deal up to six months ahead of their product expiring is key to avoid reverting to their lender’s ultra expensive standard variable rate. This does not mean they will miss out if a better deal comes along in the meantime as the Government’s new mortgage charter means borrowers can switch right up to the moment their new terms starts.”

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