House prices fell 3.1% in March, according to the UK’s largest mortgage lender, the biggest annual decline since July 2009
- Median house prices fell by £8,190 to £257,122 over the year, said Nationwide
- Higher mortgage rates limit what people can afford to borrow
- Prices are now down £16,672 compared to August peak of £273,751
Home prices fell 3.1 percent in the year to March, according to Nationwide’s latest home price index — the biggest annual drop since July 2009.
The fall brings the average property price to £257,122, down from £8,190 over the year, as the lender warns it will be ‘hard for the market to regain much momentum’.
Monthly house prices also fell, down 0.8 percent in March compared to February, the seventh consecutive monthly price decline recorded by the NATIONAL index.
House prices are under pressure as mortgage rates have risen rapidly, eroding consumer confidence
Prices are now 4.6 per cent below their August peak, wiping £16,672 off the value of an average house price in just seven months.
Robert Gardner, Nationwide’s chief economist, said: “The housing market reached a turning point last year as a result of the financial market turbulence that followed the mini-budget.
Since then, activity has remained subdued – the number of mortgages approved for home purchases remained sluggish with 43,500 in February, nearly 40 percent below a year ago level.
Home affordability has continued to be under pressure since mortgage rates skyrocketed to an average of more than 6 percent late last year.
While rates have since fallen and appear to be between 4 and 5 percent, they are still significantly higher than a year ago.
This has eroded consumer confidence amid the ongoing cost-of-living crisis, driven in part by stubbornly high inflation rates and successive increases in bank rates driving up the cost of borrowing.
Mortgage lending fell sharply at the start of the year, but recovered slightly in February
Median house prices in the UK fell by £8,190 to £257,122 in the year to March
Despite mortgage approvals rising by 10 per cent in February compared to the previous month, the monetary value of mortgages lent fell from £2bn to £0.7bn, the lowest level since April 2016, according to official data.
House price growth slowed in all regions of the UK in the first quarter of 2023. Nine of the 13 regions recorded annual house price falls from January to March.
On a year-on-year basis, Scotland remained the weakest performing region with prices 3.1% lower than a year ago, a sharp slowdown from the 3.3% year-on-year increase in the previous quarter.
The outer southeast saw a 1.5 percent year-on-year decline, while London saw a 1.4 percent decline.
House prices have fallen in almost all regions of the UK over the past year, with the exception of the South West