House prices record biggest annual drop since 2009

UK house prices have recorded the largest annual drop in 14 years reports the FT as rising mortgage costs pile pressure on the property market, according to data today from Nationwide. Prices for July fell 0.2% on the previous month and by 3.8% compared with the same month last year, the largest fall since 2009. The Halifax marked prices down by 2.6% over the year to June, the largest year-on-year since June 2011.

The average cost of a home in the UK according to Nationwide is now £260,828.

According to the July update from ONS the annual rate in May was 1.9%, down from 3.5% in April and the asking price of properties coming to market fell by an average of 0.2% according to July figures from Rightmove.

Despite falling prices, affordability issues continue to plague buyers. According to Nationwide’s analysis, purchasing a typical first-time buyer property with a 20% deposit would swallow 43% of an individual’s take home pay – assuming they earned the UK average wage, and secured a mortgage rate of 6%.

A year ago, the same purchase would account for just 32% of average monthly income. Elsewhere, a 10% deposit on the average UK property represents 55% of gross annual average income.

The Bank of England will announce the new Bank Rate on Thursday. It currently stands at 5%, but the expectation is that it will rise to 5.25%.

According to Zoopla’s analysis, rising mortgage rates have suppressed buyer demand, which has fallen 18% in the last two months. Sales volumes for 2023 are expected to be 23% lower than in 2022, suggesting many would-be buyers are delaying their move. In Cambridge for example, average house prices fell 0.9% they say, while they declined 0.4% in Bournemouth and 0.2% in Portsmouth. In London, prices fell 0.6%. The average home in the capital according to Zoopla now costs £524,900.