UK house prices fall at fastest rate since 2009, says Nationwide | Housing market
UK house prices fell 5.3% in August in contrast with the identical month final yr, the fastest annual drop in 14 years, in line with Nationwide Building Society.
The lender stated the fall, which was the most important since July 2009, when the worldwide economic system was within the depths of the monetary disaster, was pushed by hovering mortgage prices, that are laying aside potential consumers. Average house prices are greater than £14,500 decrease than they have been a yr in the past and mortgage approvals have plummeted by a fifth in contrast with pre-pandemic ranges.
Prices fell 0.8% in August in contrast with July, dragging down the standard worth of a UK residence to £259,153.
“The softening is not surprising given the extent of the rise in borrowing costs in recent months, which has resulted in activity in the housing market running well below pre-pandemic levels,” stated Robert Gardner, the chief economist at Nationwide.
Mortgage charges have risen sharply over current months in response to the Bank of England, which has raised rates of interest 14 occasions since December 2021, from 0.1% to 5.25%.
Nationwide stated the variety of completions of house gross sales was down 20% within the first half of the yr in contrast with 2019, and about 40% down on 2021, when the UK skilled a housing gross sales increase due to components together with low rates of interest and the implementation of a stamp responsibility vacation by the federal government.
While the proportion of individuals shopping for with money has remained robust, the variety of completions by these requiring a mortgage has plummeted.
“Home mover completions with a mortgage in the first half of 2023 were 33% lower than 2019 levels, while first-time buyer numbers were about 25% lower,” Gardner stated. “By contrast, cash purchases were actually up 2%. The relative weakness of mortgage activity reflects mounting affordability pressures as the result of the sharp rise in mortgage rates since last autumn.”
after publication promotion
Earlier this week, a report by the property portal Zoopla predicted that the variety of UK houses offered this yr would fall to the bottom stage in additional than a decade, with the hovering price of mortgages laying aside homebuyers.
House gross sales reaching completion are anticipated to fall 21% yr on yr to about 1m in 2023, the bottom stage since 2012.
“Constant interest rate rises are making affordability difficult for buyers who are trying to move, with many having little option but to wait until rates settle,” stated Tomer Aboody, a director of the property lender MT Finance. “With some better news on inflation recently, it would be useful if the Bank of England postponed the next rate rise, giving the market some breathing space to adjust.”
