Both The Nationwide and The Halifax; building societies, have said that house prices have fallen at the fastest pace for 14 years. The building society said prices in the year to May dropped by 3.4%, the biggest decline since July 2009.
The housing market is showing growing signs of stress as mortgage lending collapsed to the lowest monthly level on record, and property valuations fell at the fastest annual rate in almost 14 years.
It also warned that more rises in mortgage interest rates could hit the housing market. At first glance, this may seem like good news for first-time buyers but rising interest rates mean that mortgage costs are now higher and people looking to get on the housing ladder may be edged out under affordability.
Why have UK House prices fall sharply
Mortgage rates have risen recently on expectations that the Bank of England will have to lift interest rates again because of stubbornly high inflation.
As a result, “headwinds to the housing market look set to strengthen in the near term”.
The Nationwide building society said
House prices edged down by 0.1% in May itself, The Nationwide said, and the average property price now stands at £260,736.
Average prices are still 4% below their August 2022 peak, it added.
A drop in house prices would generally be welcomed by first-time buyers, who have watched property values continue to climb in recent years, even during the pandemic.
