Housing market ‘loses fizz’ as prices drop again
The ‘fizz’ has left the housing market, an industry veteran has claimed after the Nationwide House Price Index revealed a second consecutive monthly drop in house prices.
Nationwide’s January House Price Index shows average prices fell 0.6% last month to £258.297.
Annual price growth slowed from 2.8% to 1.1% and prices are now below August’s peak, Nationwide said.
Average prices were down 2.3% on a quarterly basis, according to the index.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said a slowdown was inevitable.
Leaf added:
“These numbers reflect activity at the end of last year when business was slowing quite rapidly after the mini-Budget shock but was still being supported by stock shortages.
“The fizz has certainly left the market, leaving behind more serious needs-driven as opposed to discretionary buyers, coming to terms with more stable mortgage rates and greater balance between supply and demand.”
Robert Gardner, Nationwide’s chief economist, added that while mortgage rates are normalising, it is “too early” to tell if the market has started to recover.
Gardner added:
“It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks.”
Tom Bill, head of UK residential research at Knight Frank, said the UK housing market is headed for an annual fall in prices as mortgage rates remain notably higher than 12 months ago.
Bill said:
“To anticipate how steep, you need to look beyond the short-term distortion of the mini-Budget. For example, buyers and sellers switched off early for Christmas but activity bounced back in January.
“The resilience of prices and sales volumes will be put to the test in the spring when larger numbers of transactions take place and by which time virtually no five-year fixed-rate mortgages below 4% will remain in circulation.
“We expect prices to decline 10% over the next two years as budgets get recalculated.”
Kindly shared by Estate Agent Today
Main article photo courtesy of Pixabay
