(qlmbusinessnews.com Thurs, 7th Sept, 2023) London, UK —
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New data released today confirms that UK house prices have experienced their most significant annual decline since the aftermath of the financial crisis. The cooling effect of high interest rates is impacting the property sector.
Halifax, the largest lender in the UK, has revealed that the average property price fell by 4.6% on an annual basis in August, marking a departure from the record highs witnessed last summer. This represents the most substantial year-on-year decrease in house prices since 2009.
The typical price of a UK home has now dropped to £279,569, a decline of approximately £14,000 over the past year, bringing it back to levels last seen in early 2022. Nevertheless, this still leaves average prices around £40,000 higher than pre-pandemic levels.
This drop is more significant than initially anticipated, as economists had predicted a 3.45% annual fall.
In terms of monthly figures, the average house price experienced a decline of -1.9% in August, marking the most substantial monthly fall since November 2022.
Halifax's report highlights that Southern England and Wales are currently under the most downward pressure in terms of property prices, while Scotland is displaying greater resilience.
Last week, Nationwide, another prominent lender, reported that UK house prices had fallen by 5.3% in August, marking the most substantial annual decline in 14 years.
However, there are indications that UK borrowing costs may be nearing their peak. Bank of England Governor Andrew Bailey stated yesterday that interest rates are likely “near the top of the cycle,” and he predicts a further “marked” decrease in inflation this year.
Nonetheless, at present, higher rates are having a cooling effect on the property markets.
Kim Kinnaird, Director at Halifax Mortgages, commented:
“It’s fair to say that house prices have proven more resilient than expected so far this year, despite higher interest rates weighing on buyer demand. However, there is always a lag effect when rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs flowing through to house prices.”
Kinnaird added that some potential buyers have postponed their transactions in the hope of market stability and greater clarity regarding the future direction of interest rates in the coming months.
The market is expected to continue rebalancing until it reaches a point where buyers are comfortable with mortgage costs in a higher range than what has been seen over the past 15 years.
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