UK house prices fell last month at the fastest annual rate in 14 years, as higher interest rates adversely affected people’s ability to purchase property with a mortgage.
According to Nationwide building society, residential property prices fell by an average of 3.8% year-on-year, the sharpest drop since July 2009 when the global economy was in the grips of financial crisis. It compared with a fall in annual prices of 3.5% in June.
The average price of a typical home now stands at £260,828, 4.5% below the peak reached in August last year.
The latest data also reveals that property prices dipped by an average of 0.2% in July compared with previous month.
Mortgage Rates
The Bank of England, have now raised interest rates 14 successive times since December 2021 in an attempt to curb soaring inflation and this could yet lead to another rise in mortgage costs, making the prospect of acquiring property even more unaffordable for many people.
Higher borrowing costs have knocked sentiment and forced buyers to recalculate their budgets but the property market hasn’t slammed on the brakes.
Another modest fall in house prices in July reflects what we are seeing on the ground. There may be greater willingness to negotiate when it comes to the asking price but the market is still robust.
We aren’t seeing the dramatic shifts in price that they were during the pandemic, with properties holding their value relatively well considering the economic challenges that have faced the country this year.
Affordability is the biggest barrier to homeownership, as inflation and cost of living pressures are still gripping households. Without the certainty of knowing that they can pay back monthly mortgage repayments, potential buyers may be hesitant to part with their deposit.
Despite high rates and affordability pressures, mortgage approvals are returning back to healthy levels. High rental prices across the country mean that now is still a good time to buy, if you are able to secure a mortgage.
The latest inflation figures show some light at the end of the tunnel, and there is still a good chance that the year will be softer on the industry than was previously forecast.
As we always say, whilst not ignoring current market trends, Newport and Telford are places to live and work, and sales do seem to be holding up, so if you are considering a move this year please use our valuation tool on our website for a free valuation, email or call us on 01952 812519 to arrange a no obligation market appraisal. We are open 7 days a week.
