House prices fall at the fastest rate since 2012 says Nationwide

According to lender Nationwide, the average cost of a house in the UK fell 1.1% last month, the biggest annual decline since November 2012 and the first decline since June 2020 at the start of the pandemic.

They are now down 3.7% from a peak reached last August, just before Quasi Kwarteng’s disastrous mini-budget, which raised mortgage rates. The 0.5% monthly decline was the sixth in a row, leaving the average house price across the UK at £257,406.

Robert Gardner, chief economist at the Building Society, said: “The recent weak house price data coincided with financial market turbulence in response to the mini-budget at the end of September last year. While financial market conditions returned to normal some time ago, housing market activity remains sluggish.

“This prospect reflects the impact on confidence as well as the cumulative effect of financial pressures that have been weighing on households for some time. Indeed, inflation has outpaced wage growth and mortgage rates are set to hit record lows in 2021.” remains significantly higher than that. Even though consumer sentiment has improved in recent months, it is still sluggish at levels prevalent during the depth of the financial crisis.

“It will be difficult for markets to gain much momentum in the near term as economic headwinds are set to remain relatively strong, with the labor market expected to weaken broadly as the economy shrinks in the quarters ahead, while mortgage rates remain well Stays above. Prevailing lows in 2021.

“Indeed, despite the modest drop in home prices, for a potential first-time buyer looking to buy a typical home, the average income earner as a share of take-home pay is higher than the long-term average. Moreover, deposit requirements remain prohibitively high for many and saving for a deposit remains a struggle given the rising cost of living, especially for those living in private rented accommodation. Are in an area where rents are increasing strongly.

“However, if inflation moderates as expected in the coming months, the situation should gradually improve once the pressure on the household budget eases. Along with solid gains in nominal incomes, house prices weaken or fall. , This will also help with housing availability, especially if mortgage rates come down in the coming months.

Matt Thompson, head of sales at London agent Chesterton, says: “As the UK economy shows signs of recovery, we are starting to see more sellers capitalize on the positive market sentiment. registered a growth of 2% in the number of properties being put up for sale as compared to the same month of the year.

“Nevertheless, the capital continues to experience a chronic shortage of suitable housing; Demand remains strong especially since the start of 2023 with more buyers booking in sight. Simultaneously, the number of offers being withdrawn has come down by 11%, which indicates that fewer window shoppers and more serious buyers are entering the market.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Average property prices fell in February as higher mortgage costs, coupled with the rising cost of living, have an inevitable impact on affordability.

“Swap rates, which underpin the pricing of fixed-rate mortgages and have been falling since the upheaval created by the mini-budget in September, have taken a turn and lagged behind expectations the other way over the past few weeks. The base rate rises further. Then, many lenders launched sub-4 percent five-year fixed-rate mortgages, have since extended them, with mortgage rates going up and down in the coming weeks. is likely to.

“Borrowers should consult a broker across the market before plunging or holding in the hope that rates will go down further.”

Jeremy Leaf, North London estate agent and a former residential chairman of RICS, said: “These comprehensive and widely respected figures reiterate the continuing concerns about interest rates and inflation keeping prices under control.

However, the market is definitely not in free-fall. On the ground, we’re seeing more listings and longer sales, so buyers have more options, are taking longer and are negotiating harder when making offers.