For the fifth consecutive month, house prices in the UK have fallen nationwide, falling well below the average cost of a house by 3.2% from its peak seen last August.
The annual house price growth declined in January to 1.1% from December’s 2.8%. It is one of the slowest growth rates since June 2020, when the housing market reopened following the pandemic global lockdown.
In January, the average property price fell nearly £4,000 from the previous month, from £262,068 to £258,297.
As of now, it is difficult to tell if housing market activity has begun to recover nationwide because mortgage rates have begun to normalize following a soaring high as a disastrous mini-budget proposed by Liz Truss and Kwasi Kwarteng was announced last year.
As per the report from the Bank of England, the number of home loans approved dropped in December, recording the lowest demand for mortgages since the lockdown due to the pandemic imposed in 2020.
Nationwide’s chief economist, Robert Gardiner, said the depressing economic prospectus will continue to hamper the housing market and prospective buyers.
“It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labor market widely projected to weaken as the economy shrinks,” he stated.
As a result of an increase in mortgage rates, prospective buyers nationwide were finding it difficult to find a property that they can afford.
Even though mortgage rates have fallen slightly in recent weeks, the Bank of England is expected to raise interest rates for the tenth time in a row on Thursday. The central bank’s base rate is predicted to rise to 4%, the highest level since the financial crisis of 2008.
Compared to 2021, many homebuyers struggled with affordability all across the UK as the servicing of a typical mortgage surged due to the higher mortgage rates.
Although Scotland and the north of England continued to be the most affordable regions for property, the acute affordability pressures in London and the south of England, meanwhile, have caused mortgage payments as a percentage of take-home pay to reach their highest level in more than ten years in these two regions.
Nonetheless, the rising cost of renting a home has been increasing at a faster pace since 2005, making it challenging for renters to save money for a house deposit.
- Published By Team Timeswire