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Biggest Annual Fall in House Prices Since 2009

inflation

According to the latest figures from Nationwide, house prices in the UK have fallen at their fastest annual pace for 14 years. The lender reported a decline of 3.1 percent compared to the previous year, marking the largest annual drop since July 2009. Nationwide noted that the housing market reached a “turning point” last year following the financial turbulence that followed the mini-budget.

Nationwide’s Chief Economist, Robert Gardner, said:

“It will be hard for the market to regain much momentum in the near term, since consumer confidence remains weak and household budgets remain under pressure from high inflation”

Since then the market has remained subdued due to weak consumer confidence and households facing financial pressure from high inflation.

[MB1] Other things being equal a decline in house prices benefit first-time buyers and people buying moving to more valuable houses, however due to rising mortgage rates housing costs can are still increasing for many people.

Nationwide’s findings, based on its own lending data, suggest that prices have now fallen for seven months in a row. Other house price surveys and commentary echo this conclusion, showing a slowdown in the sector and falling prices.

What do analyst have to say?

Analyst at investment platform Bestinvest, Alice Haine said:

“The red-hot property market of pandemic days – when buyers snapped up bigger homes in the race for space, aided by temporary stamp duty incentives – is now behind us, with buyers and lenders taking a far more conservative approach towards home ownership.”

Factors contributing to the fall in house prices

One major factor in the slowdown is rising mortgage rates. Rates surged after last year’s mini-budget during the short-lived Truss Government. Although the rates have decreased partially since then, a succession of base rate rises by the Bank of England have fed through meaning that interest rates on home loans are higher now than people became accustomed to in the past decade. The Bank of England has recently raised interest rates by a quarter of a percentage point to 4.25 per cent.

The UK’s housing market is made up of a series of local property sectors, but Nationwide’s regional breakdown for the first three months of the year suggests a slowdown across all areas of the country. The ongoing impact of the pandemic and its economic fallout may be contributing to this trend.

While the decline in house prices may provide some relief for first-time buyers, it also presents challenges for current homeowners looking to sell. Those who purchased their homes at the peak of the market will likely face significant losses if they sell now. The decline in the housing market may also impact the wider economy, as the housing market is an important [MB2] sector of the UK’s economy.

Final thought

Despite the current slowdown in the housing market, some experts predict that the sector will recover in the long term. The rollout of the COVID-19 vaccine and the easing of lockdown restrictions may boost consumer confidence and stimulate demand. However, the future of the housing market remains uncertain, particularly as the ongoing impact of Brexit and other economic factors continue to create uncertainty in the UK’s economy.[MB3] 


 [MB1]This is a good point but needs to be made more objectively. Could also be clearer.

 [MB2]Slightly too emotion filled word. You will find it in other articles we’ve written just try to minimise.

 [MB3]This paragraph is a very weak end to a factual article. It doesn’t bring any new information.

However it is just about suitable for a final thought. If you had stronger opinions, this would be a place to put them.

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