UK HOUSING PRICES UNEXPECTEDLY DROP AGAIN
Surprising dips in UK house prices persist into April for a second consecutive month, reports Nationwide Building Society.
The recent consecutive decline in UK house prices, combined with the ongoing rise in fixed mortgage rates, underscores mounting pressure on the Bank of England. Economists speculate that these declines may signify a developing trend, intensifying concerns within the housing market. As the nation braces for the upcoming interest rate announcement, all eyes are on policymakers to navigate these uncertain waters.
In April, the housing market experienced a slight downturn, with the average house price dropping to £261,962, representing a 0.4% decline compared to March. This follows a previous decrease of 0.2% recorded in the lender’s monthly index.
Interestingly, when looking back to August 2022, just before Liz Truss’s mini-budget rattled financial markets, the average UK home has seen a significant depreciation of £11,700 in value. This decline underscores the lasting impact of the economic turbulence triggered by the policy changes.
As homeowners and potential buyers navigate these fluctuations, it highlights the importance of closely monitoring market trends and being prepared for potential shifts in property vale
In April, Nationwide reported a decrease in the annual house price growth rate to 0.6%, down from 1.6% the previous month. Robert Gardner, Nationwide’s chief economist, attributed this slowdown to ongoing affordability pressures, citing the rise in longer-term interest rates in recent months, which have reversed the steep decline observed earlier in the year.
Gardner also noted that house prices are now approximately 4% below the all-time highs recorded in the summer of 2022, factoring in seasonal effects.
In response to economic forecasts pushing back expectations for when the Bank of England will begin cutting interest rates, major lenders such as Barclays, HSBC, and NatWest increased rates on their fixed mortgage deals. Nationwide followed suit by raising some of its fixed rates by up to 0.25 percentage points, reflecting a broader trend of rising mortgage costs. According to Money facts, the average new two-year fixed mortgage rate has climbed to 5.91%.
Anticipation surrounds the Bank’s upcoming interest rate decision, with expectations for a rate cut later in the year. While some economists suggest a possible cut as early as June, others believe August or September is more probable.
Tom Bill, head of UK residential research at Knight Frank, commented on Wednesday’s figures, highlighting that the strong house price growth witnessed in the first two months of the year is now reversing. Bill attributes this reversal to higher mortgage rates dampening demand in the housing market.
We believe demand and house price growth will pick up later this year as a rate cut moves on to the horizon.”
Nationwide’s analysis also indicated a moderation in the recent recovery of housing market activity, despite mortgage approvals rising in March to their highest level since September 2022.