The average house cost fell to £257,406, according to Nationwide’s index, as the September mini-budget is shown to be a “turning point” for the property market.
According to one of the largest mortgage lenders in the United Kingdom, house prices have declined for the sixth consecutive month and 1.1% over the past year.
House price data from the Nationwide building society indicated it was the first annual decline since June 2020.
The monthly price decline from January to February was 0.5%, making February the weakest month since November 2012.
The average dwelling price decreased to £257,406 in February from £258,297 in January as a result of the decline.
House prices last month were also down 3.7% from the apex of last August.
The demand for homes is being dampened by a decline in mortgage approvals.
The Bank of England reported on Wednesday that net mortgage approvals decreased for the fifth consecutive month, to 39,600 in January from 40,500 in December.
If the COVID-19 pandemic period is excluded, this was the lowest net approvals figure since January 2009 (32,400). (32,400).
However, the lower prices do not make it simpler for first-time buyers, according to Nationwide’s chief economist.
For a prospective first-time buyer with a median income seeking to purchase a median home, mortgage payments continue to be significantly higher than the long-term median share of take-home pay.
Robert Gardner stated that deposit requirements continue to be “prohibitively high for many,” and that saving for a deposit “remains a challenge,”, particularly for those in the private rented sector, where rents have risen significantly.
Gardner added that the situation may improve if inflation moderates as anticipated in the coming months. As wage increases and falling home prices would support housing affordability.
While the market volatility that followed the Liz Truss mini-budget has subsided, the chief economist at Nationwide reported that housing market activity remained subdued.
These effects have impacted market confidence and added to the wider economic factors weighing on households. Such as double-digit inflation and falling real wages as pay increases failed to keep up with inflation.
Sarah Coles, the director of personal finance at Hargreaves Lansdown, referred to the September mini-budget and associated mortgage turmoil as a “turning point for the market.”
“After months of increasingly painful inflation, purchasers were at their breaking point. And the mortgage market chaos following the mini-budget was the last straw,” she said.
From that point on, we were aware that a house price correction of some sort was likely to occur.
According to Ms. Coles, the future of the housing market is uncertain, even though prices are anticipated to continue declining.
“The question is whether this is the start of a gradual and moderate deflation or a bubble about to explode. There’s no doubt that we’ll see more declines in the coming months, but predictions range from 5% to 12%.”
“Unfortunately, it’s becoming increasingly challenging to maintain optimism.”
