House prices record largest annual decline in 14 years
House prices record largest annual decline in 14 years
- House prices fell by 0.2% month-on-month in July
- They are down 3.8% year to July, up 3.5% year to June
According to Nationwide’s latest home price index, house prices fell 3.8 percent in the year to July.
The average house price is now £260,828, down from £262,239 this time last year.
This is the sharpest decline since July 2009, according to Nationwide, and an increase from last month’s annual decline of 3.5 percent.
Home prices fell 3.8% annually in July, according to Nationwide’s latest home price index
The change in July comes after a slight decline of 0.2 percent over the month, taking seasonality into account.
As a result, the price of an average home is now 4.5 percent below the peak of August 2022.
Robert Gardner, Nationwide’s chief economist, believes the continued decline in home prices is mainly due to higher mortgage interest rates.
He says, “Housing affordability continues to be under pressure for people looking to buy a house on a mortgage.
For example, a prospective buyer, earning the median wage and looking for the typical property for a new buyer with a 20 percent down payment, would see monthly mortgage payments make up 43 percent of their take-home pay — assuming a 6 percent cent mortgage interest.
“This is up from 32 percent a year ago and well above the long-term average of 29 percent.”
The average house price is now £260,828, down from £262,239 this time last year
Gardner adds: “Moreover, deposits remain a major hurdle – with a 10 percent down payment equivalent to 55 percent of gross annual average income.
This challenging affordability picture helps explain why activity in the housing market has been subdued in recent months.
“In June, there were 86,000 completed housing transactions, 15 percent below last year’s level for the same period and about 10 percent below pre-pandemic levels. Moreover, activity is still about 20 percent below the level of 2019.’
