March 1, 2023: U.K. house prices saw their sharpest annual decline since 2012 in February, according to Nationwide.
Christopher Furlong | Getty Images News | Getty Images
LONDON — U.K. house prices fell by 1.1% annually in February, their first annual decline since June 2020 and the sharpest contraction since November 2012, according to a widely-watched report from building society Nationwide.
February saw a 0.5% month-on-month fall, with prices now 3.7% lower than their August 2022 peak as higher mortgage rates and a cost-of-living crisis continued to deter homebuying.
“The recent run of weak house price data began with the financial market turbulence in response to the mini-Budget at the end of September last year,” said Nationwide Chief Economist Robert Gardner in a press release on Wednesday.
“While financial market conditions normalised some time ago, housing market activity has remained subdued.”
Mortgage rates soared in September 2022 after former Prime Minister Liz Truss’ disastrous tax-cutting “mini-budget” prompted a historic sell-off in the U.K. government bond market, eventually leading to a Bank of England intervention and Truss’ resignation after 44 days in office.
February’s fall likely reflects the lingering damage to confidence and squeeze on household incomes, with inflation continuing to outpace wage growth and mortgage rates remaining substantially higher than their 2021 lows, Gardner explained.
“It will be hard for the market to regain much momentum in the near term since economic headwinds look set to remain relatively strong, with the labour market widely expected to weaken as the economy shrinks in the quarters ahead, while mortgage rates remain well above the lows prevailing in 2021,” he said.
Mortgage payments on a typical home remain well above the long run average as a share of take-home pay for a prospective first-time buyer earning the average income, Nationwide noted.
Meanwhile, deposit requirements remain “prohibitively high” in the…
Read the full article here
