August saw the biggest fall in UK house prices for 14 years, according to the latest housing price index (HPI) of building society Nationwide.
House prices fell 0.8% month on month in August and are now 5.3% below August 2022 peak and the weakest rate since July 2009.
This means that the average home is now £14.600 (€17.040) cheaper than a year ago.
Robert Gardner, Nationwide's chief economist, commented: ‘Mortgage approvals have been around 20% below the 2019 average in recent months and mortgage application data suggests the weakness has been maintained more recently. Unemployment is expected to remain low, so most borrowers should be able to afford the higher mortgage payments. Healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time.’
The number of completed housing transactions was nearly 20% below pre-pandemic (2019) levels and around 40% lower than in H1 2021.
Cash purchases have been more resilient than mortgage purchases, which have slowed sharply.
Home mover completions (with a mortgage) were 33% lower than 2019 levels, whilst first-time buyer numbers were 25% lower.
Buy-to-let purchases involving a mortgage were nearly 30% below pre-pandemic levels, while cash purchases were up 2%.
Flats have remained more affordable than detached houses, with average prices rising by 13% compared to 23% for the later.
Robert Gardner added: ‘The relative weakness of mortgage activity reflects mounting affordability pressures as a result of the sharp rise in mortgage rates since last autumn, which would not have affected cash buyers. For owner-occupiers buying with a mortgage, there has also been a modest shift in the type of properties being purchased. While transactions are lower than pre-pandemic levels across all property types, the biggest decline has been in detached houses. There are signs that buyers are looking towards smaller, less expensive properties, with flats seeing a smaller decline.’
