According to mortgage lender Nationwide, there has been a significant decline in British house prices last month, which is the largest in over a decade. This drop in prices indicates a slowing down of the housing market, possibly due to high inflation and increasing borrowing costs. The year-on-year decrease of 1.1% is the biggest drop since November 2012 and the first annual decrease since June 2020, which was during the early stages of the coronavirus pandemic when prices had only slightly decreased by 0.1%.
According to mortgage lender Nationwide, there has been a significant decline in British house prices last month, which is the largest in over a decade. This drop in prices indicates a slowing down of the housing market, possibly due to high inflation and increasing borrowing costs. The year-on-year decrease of 1.1% is the biggest drop since November 2012 and the first annual decrease since June 2020, which was during the early stages of the coronavirus pandemic when prices had only slightly decreased by 0.1%.
According to data from the Bank of England, the number of mortgages approved by British lenders in January was the lowest since 2009, except for a decline that occurred at the beginning of the COVID-19 pandemic. A Reuters survey released on Tuesday predicts a 2.4% decline in house prices in 2023, which is less than previously expected due to a robust job market and reduced concerns about a recession, helping to ease the impact of higher borrowing costs.
Nationwide reported a sixth consecutive month-on-month decline in prices, which were down by 0.5% compared to January. This is the longest such period since 2007-2009 during the global financial crisis. Economists polled by Reuters had projected a 0.9% year-on-year price drop and a 0.4% decrease in monthly terms.
Nationwide also noted that prices have fallen by 3.7% since their peak in August of last year. The mortgage market was significantly disrupted in late September and October due to former Prime Minister Liz Truss’s mini budget, which resulted in market booms
According to Nationwide’s chief economist, Robert Gardner, the housing market is expected to face difficulties in the short term due to the risk of a recession, as mortgage payments are currently higher than the average take-home pay. However, Gardner suggested that conditions could gradually improve if inflation decreases in the upcoming months as predicted, which would alleviate the burden on household budgets.
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