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House prices falling at highest rate since 2009

The Nationwide House Price Index (HPI) released its figures yesterday that showed house prices had fallen by a whopping 3.4% in the year to May

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 2 June 2023

3 min read

House prices falling at highest rate since 2009

Many have suggested that house prices in the United Kingdom have been too high for many years, especially in certain areas of the country. We’re now seeing the after effects of the price boom following the pandemic as things settle back to normal as many predicted.

The Nationwide House Price Index (HPI) released its figures yesterday (1st June) that showed house prices had fallen by a whopping 3.4% in the year to May. This marks the biggest drop in house prices in the UK for 14 years, since 2009.

The average property price in the UK is now £260,736 according to figures from Nationwide, which is still 4% below the peak in August 2022.

Mortgage rates are also driving lower property prices across the country as many struggle to meet repayments and new mortgages are no longer affordable. It is also being suggested that there could be a further increase by the Bank of England of 0.25% to 4.75% later this month.

This news will be welcomed by millions of First Time Buyers who are struggling to get their foot on the property ladder.

In an attempt to release some of the financial pressures for First Time Buyers, Skipton recently announced plans to re-launch 100% mortgages for renters and FTB’s. This is a clear sign that the housing market is trying to increase activity and lenders are being urged to do what they can to help.

More about mortgages:

House prices fluctuate regularly and it has been widely suggested that prices have been overinflated in the UK following the boom in demand post pandemic.

Record low mortgage rates and government incentives, such as the Stamp Duty Holiday, have driven up demand for several years. The increased demand has understandably caused vendors and estate agents to increase property prices.

Will property prices continue to fall?

Probably not, it is likely that house prices will settle as the housing market slows and the economy stabilises.

Mortgage interest rates are predicted to increase by a further 0.25% which is higher than economists predicted to peak at 4.5%. Inflation rates are falling in the UK and all of this compounded should result in a period of stabilisation for the property market.

What are the experts saying?

Nationwide’s Chief Economist, Robert Gardner commented saying “Following tentative signs of improvement in April, annual house price growth softened again in May, falling back to -3.4%. However, this largely reflects the base effects with prices broadly flat over the month after taking account of seasonal effects. Average prices remain 4% below their August 2022 peak.

Recent Bank of England data had shown some signs of a recovery in the housing market, although the number of mortgage approvals for purchases was still around 20% below pre-pandemic levels.”

More mortgage and home news

Here we have more of the recent news affecting mortgages and housing in the UK in 2023.

If you’re unsure about the current mortgage market and want some help to find out what your options are, then you should speak to a qualified mortgage expert.

You can get a free mortgage health check by CLICKING HERE or call 0330 118 8188 to speak to an expert.

Resources

Nationwide – House Price Index

Land Registry – UK House Price Index

Gov.uk – UK House Price Index: reports

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