Digital Zeitgeist – House Prices In The UK Have Fallen At The Quickest Yearly Rate Since 2012
Overall, the combination of increasing mortgage rates and a declining housing market has led to a rise in rental demand in the UK. This is likely to remain the case for the foreseeable future, as mortgage rates remain high and the housing market continues to struggle. This is good news for landlords and investors, as it means that there is an increased demand for rental properties.
According to data from Nationwide, annual house price growth in the UK went negative in February for the first time in over three years, marking the lowest level since November 2012 when it was also at its lowest point.
This was the first yearly fall in the cost of a house since June 2020, when the housing market reopened following the first Covid lockdown. The 1.1% drop in prices year-over-year constituted the first annual decline in the cost of a home since then.
The monthly poll conducted by the building society revealed that home prices were down by 0.5% in February when compared with the previous month. This is the sixth consecutive month that home prices have been on the slide.
As a result of the dip, the average price of a home dropped to £257,406, which is approximately £900 less than it was a month earlier. House prices in the UK are currently 3.7% lower than they were when they hit their all-time high in August of 2022.
The instability in the financial markets that was sparked by Liz Truss’s terrible mini-budget in September of last year was the impetus for the recent run of negative home price data that has been reported.
“While financial market conditions normalised some time ago, housing market activity has remained subdued,” said Robert Gardner, Nationwide’s chief economist. “This likely reflects the lingering impact on confidence as well as the cumulative impact of the financial pressures that have been weighing on households for some time.”
The decline in home values has occurred at the same time as household budgets have been put under increased strain as a result of rising interest rates and high inflation that have outpaced increases in salary.
Because “economic headwinds look set to remain relatively strong,” Nationwide stated that it was difficult to forecast when the housing market may regain pace in the future.
Even though mortgage rates have levelled off in recent months, they are still quite a level higher than the lows recorded in 2021. Furthermore, many people anticipate that the labour market will weaken in the coming months, which will create even more uncertainty for people who are considering purchasing a home.
According to the findings of a recent poll, homeowners who wish to sell their property in the present market need to make price reductions of around £14,000 on average from the initial asking price.
The real estate website Zoopla discovered that there was a decrease in demand from homebuyers, which resulted in a price reduction for more than forty percent of the properties that it had placed for sale on its website.
According to research conducted by Nationwide, in spite of the recent declines in housing prices, potential first-time buyers who make an average salary and are interested in purchasing a typical property would still be subject to higher-than-average mortgage repayments.
In addition, they would also face challenges saving for a deposit because of the rising cost of living, and recent increases in rent in the private rented sector.
A further indication that the housing market is beginning to cool is that housebuilder Persimmon has issued a warning that the coming year would be “tough” and has projected that their earnings will decrease in 2023.
The firm, which is one of the leading home developers in the UK, is projecting a decrease in sales over the course of the following year and as a direct result, has reduced its payout by 75%. Following the announcement, the company’s stock dropped by 9% during the morning trading session on Wednesday.
online sources: theguardian.com, nationwide.co.uk, persimmonhomes.com