House prices hit by largest annual decline since 2009
Average UK house prices were hit by the largest annual decline since July 2009 last month, according to the latest Nationwide House Price Index.
Nationwide’s latest House Price Index suggests average values across the UK declined 3.1% annually and 0.8% on a monthly basis to £257,122.
All regions saw a slowing in price growth during the first quarter of the year, with most seeing small year-on-year falls and prices are now 4.6% below their August peak, Nationwide said.
Robert Gardner, Nationwide’s chief economist, added:
“The housing market reached a turning point last year as a result of the financial market turbulence which followed the mini-Budget.
“Since then, activity has remained subdued – the number of mortgages approved for house purchase remained weak at 43,500 cases in February, almost 40% below the level prevailing a year ago.
“It will be hard for the market to regain much momentum in the near term since consumer confidence remains weak and household budgets remain under pressure from high inflation.
“Housing affordability also remains stretched, where mortgage rates remain well above the lows prevailing at this point last year.”
Commenting on the data, Iain McKenzie, chief executive of The Guild of Property Professionals, said homeowners may be worried but added that agents haven’t seen an “aggressive drop-off in transactions”, which he suggests shows the slowdown in prices has “hardly been the crash that was expected.”
McKenzie added:
“Sellers are becoming more open to negotiating with buyers on the asking price and that has the potential to skew the data.
“While we are forecasting an overall decrease of around 8% this year, this would only bring house prices in line with levels back in 2021.
“Confidence is returning to the property market following the fallout of the mini-Budget last September and we should expect further improvements, so long as inflation is brought under control this year.
“First-time buyers are being reassured by lenders, as the number of mortgage approvals recently saw the first monthly increase since August last year.
“The high cost of living remains the greatest barrier to home ownership in this country.
“Inflation levels continue to squeeze households and prospective buyers will need to tighten their purse strings even tighter from next month, as government support on energy bills is withdrawn.”
Tom Bill, head of UK residential research at Knight Frank, added:
“The reverberations from the mini-Budget that shook the UK housing market won’t disappear overnight.
“After effectively shutting down for Christmas in September, the property market turned back on in January as stability returned to Westminster and the mortgage market.
“Activity has been solid this year as buyers accept the new normal for mortgage rates.
“For anyone with memories that stretch further back than 2008, it looks very much like the old normal.
“That said, more financial pain will enter the system as owners move onto higher fixed-rate deals and combined with an increase in supply from the lows of the pandemic, we expect UK prices to fall by a few percent this year.”
Kindly shared by Estate Agent Today
Main article photo courtesy of Pixabay
