UK house prices fell for the fifth straight month in January, according to Nationwide, pushing the average house price down 3.2% from the peak seen last August.
House prices fell by 0.6% in the first month of the year compared to December 2022, according to the Building Society’s monthly survey.
Annual home price growth also slowed to 1.1% at the start of the year, down from 2.8% in December. This is the slowest increase since June 2020, when the housing market reopened after freezing in the early months of the Covid pandemic.
The average house price fell to £258,297 in January, a drop of almost £4,000 from a month earlier, when the average property price was £262,068.
It is too soon nationwide to tell whether housing market activity is beginning to recover as mortgage rates offered by lenders return to normal after rising following the disastrous mini-budget of Lease Truss and Kwasi Kwarteng last September.
Demand for mortgages also fell to the lowest level since the 2020 Covid lockdown in December, according to data from the Bank of England, which found the numbers. Home loan approval The decline continued in December.
Robert Gardiner, chief economist at Nationwide, said the gloomy economic outlook is likely to have an impact on the housing market and potential buyers.
“It will be difficult for the market to regain much momentum in the near term as economic headwinds are set to remain strong, real incomes are likely to decline further and the labor market is expected to weaken broadly as the economy contracts,” he said.
Nationwide found that potential home buyers were facing greater challenges in purchasing property, as a result of the rise in mortgage rates.
Mortgage rates have fallen modestly in recent weeks, although the Bank of England is expected to raise interest rates on Thursday, which would be the 10th increase in a row.
Policymakers are expected to raise the central bank’s base rate to 4%, which would be the highest level since the 2008 financial crisis.
Home buyers have struggled with affordability in all areas of the UK in recent months, compared to 2021, Nationwide found, as higher mortgage rates push up the cost of general mortgage servicing.
Nationwide, particularly acute affordability pressures were found in London and the south of England, while mortgage payments as a share of house-to-house payments reached their highest levels in a decade in Scotland and the north of England, although they continue to be the most affordable. Areas for property.
Meanwhile, the rising cost of renting a home, which is rising at its strongest pace since records began in 2005, is making it harder for renters to save money for a down payment.
