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NewsRescue
Home prices in the United Kingdom plummeted at their steepest annual rate since the global financial crisis in August, according to mortgage firm Nationwide on Friday.
In August, housing prices fell 5.3% year on year, the largest yearly loss since July 2009. According to the company, this is due to rising mortgage rates, which have lowered buyer desire. Prices declined by 0.8% in August alone, bringing the average house worth down to £259,153 ($329,000), or roughly £14,600 ($18,500) below their peak in August 2022.
“The softening is not surprising given the magnitude of the recent rise in borrowing costs, which has resulted in housing market activity running well below pre-pandemic levels.”
Residential home prices peaked in August of last year following the pandemic, lifted by greater demand, previously low interest rates, and temporary tax incentives. However, they have dropped sharply since then as soaring rates added pressure on UK households already struggling with the cost-of-living crisis.
“We think the August data marks the start of a significant further drop in house prices,” Andrew Wishart, senior property economist at Capital Economics, said.
As a result of rising mortgage rates, UK home sales are expected to decline to their lowest level since 2012. According to recent data from the real estate business Zoopla, sales are likely to fall by 21% year on year to over 1 million this year.
“Constant interest rate rises make affordability difficult for buyers trying to move, with many having little choice but to wait until rates settle,” said Tomer Aboody, a director at property lender MT Finance.
The Nationwide research also revealed a significant slowing in the amount of home sales. A measure of completed housing deals declined about 20% from 2019 levels and 40% from the first half of 2021 levels.
