Tuesday, October 3, 2023
HomeWorld NewsLargest Decline in House Prices Since 2009 Recorded

Largest Decline in House Prices Since 2009 Recorded

House prices in the UK have recorded the biggest fall since 2009, according to the Nationwide Building Society.

In August, the average price of a house was £259,153, a 0.8 percent drop from July.

Compared to August 2022, when the average house price peaked, it has fallen by 5.3 percent, the sharpest fall in 14 years.

Related Stories

In July, the average house price declined by 0.2 percent from June and 3.8 percent compared to the same month last year.

Robert Gardner, Nationwide’s chief economist, said the price drop is “not surprising” given how much rising borrowing costs have impacted demand.

“For example, mortgage approvals have been around 20 [percent] below the 2019 average in recent months and mortgage application data suggests the weakness has been maintained more recently,” he said.

However, Mr. Gardner is still optimistic about the prospect of a “soft landing” because of the high proportion of people on fixed rates, strict affordability tests, and the expectation that unemployment will remain low.

“While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time, especially if mortgage rates moderate once Bank Rate peaks,” he said.

Mr. Gardner said that the number of completed housing transactions in the first half of 2023 was nearly 20 percent below pre-pandemic levels and around 40 percent below that in the same six months in 2021, “though the latter reflects the boost to activity from pandemic-related shifts in housing preferences, the stamp duty holiday, and ultra-low borrowing costs.”

A breakdown of the transactions show while buyers’ mortgages were impacted by higher costs, cash purchases have been “remarkably resilient.”

Meanwhile, latest previsional figures released by HMRC show the number of completed home sales in July fell by 9 percent from June and 22 percent from July 2022.

After adjusting for the season, the number was estimated to have edged up by 1 percent on June but fell by 16 percent compared to the same month last year.

HMRC noted that the figures did not necessarily reflect the current strength of the housing market, because they represented sales completions, which were on average two to four months after an initial offer was made on a property.

Mortgage rates have jumped in recent months amid a string of Bank of England base rate rises as it moves to quell inflation, although there have been some signs of fixed rates settling down in recent weeks.

In a sign of what is on the horizon, figures released by the Bank of England on Wednesday showed that the number of mortgage approvals made to home buyers fell by nearly 10 percent between June and July.

Some 49,444 approvals were recorded in July, down from 54,605 in June, according to the bank’s Money and Credit report.

James Bull of Huddersfield-based mortgage broker JB Mortgages, said: “Throughout the year, the purchase market has really slowed as the impact of higher mortgage rates has kicked in.

“Clearly, there are regional variations but the one constant is that only realistically priced properties will sell.”

Tomer Aboody, director of property lender MT Finance, said: “The declining number of transactions, combined with negativity in the market, is resulting in a softening of property prices, a trend which has been evident for several months.

“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.”

David Stirling, independent financial adviser at Belfast-based Mint Mortgage and Protection said: “Many borrowers are looking at extending their mortgage terms to try to help them manage their monthly mortgage payments. With this in mind, HSBC extending mortgage terms to 40 years is a very welcome criteria change.”

Simon Gerrard, managing director of London-based Martyn Gerrard estate agents, said, “August is typically a slower month as people prioritise their summer holidays over house hunting.”

PA Media contributed to this report.

Source link

I'm TruthUSA, the author behind TruthUSA News Hub located at https://truthusa.us/. With our One Story at a Time," my aim is to provide you with unbiased and comprehensive news coverage. I dive deep into the latest happenings in the US and global events, and bring you objective stories sourced from reputable sources. My goal is to keep you informed and enlightened, ensuring you have access to the truth. Stay tuned to TruthUSA News Hub to discover the reality behind the headlines and gain a well-rounded perspective on the world.
- Advertisment -

Most Popular

Recent Comments