House prices fall annually, says Nationwide, in biggest dip since 2012
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House prices fall: Downturn gains momentum as property values fall 1.1% in first annual decline since June 2020 – and biggest in 12 years
- Nationwide said monthly house prices in the UK fell 0.5% in February
- Since peaking in August 2022, prices are now down 3.7%
- The economic downturn will make it difficult for the market to gain momentum
Home prices have fallen annually for the first time since the early months of the pandemic, according to Nationwide’s latest index.
The annual decline of 1.1 percent as growth turned negative was the biggest drop since 2012, with higher mortgage rates and the cost of living crisis continuing to weigh on the real estate market.
The average house price fell by 0.5 percent, or £891, to £257,406, according to Britain’s largest building company.
This was the sixth consecutive month in which house prices fell, with the average home falling £16,345 from the August peak of £273,751 on the Nationwide index.
House prices fell in February for the first time annually since June 2020, says Nationwide
Nationwide said home prices are down 3.7 percent from their peak on the seasonally adjusted measure, but compared to a pure price level, the decline is a much larger 6 percent.
House prices are expected to continue falling and the year-on-year decline is likely to intensify as comparisons to last year’s property value levels become more difficult.
Nationwide’s chief economist Robert Gardner said it will be difficult for the real estate market to pick up again as the economy will contract in the coming quarters while mortgage rates remain well above 2021 lows.
He said: “The recent string of weak house price data began with the turbulence in the financial markets in response to the mini budget at the end of September last year.
While conditions in the financial markets normalized some time ago, activity in the housing market has remained subdued.
This likely reflects the ongoing impact on confidence, as well as the cumulative impact of financial pressures that have weighed on households for some time.
Indeed, inflation has continued to outpace wage growth and mortgage rates remain significantly above 2021 lows.
“While consumer confidence has improved in recent months, it is still languishing at levels seen during the depths of the financial crisis”
The average mortgage payment for starters is now 40% of their net salary
Home deposits remain prohibitively expensive despite the recent fall in prices
Although a fall in house prices may in theory be welcome for first-time buyers, mortgage rates remain high.
Meanwhile, mortgage costs are well above the long-term average in terms of take-home pay and bail bonds remain “prohibitively high.”
The average 10 percent down payment is equivalent to more than half of a first-time buyer’s gross annual income.
Nick Harris, co-founder of Quarters Residential Estate Agents in Wokingham, said: ‘Although this data shows downward pressure on prices, demand for property was much higher in February than in January.
This shows that while discretionary buyers are taking it easy, serious buyers remain active.
‘Sellers are much more realistic about price, and are usually buyers too, so they appreciate a more balanced real estate market. Locally, we do not expect the often reported ‘crash’, but we certainly see that a correction of approximately 5 percent is realistic. It’s no secret that the market is currently in favor of buyers.”