After an already weak 2018, UK house prices may experience further erosion next year, according to one of the country’s most influential mortgage lenders. Nationwide Building Society predicted prices may stagnate or drop up to 2%; less severe than what had been predicted by its rival Halifax.
Nationwide Credit Union reported that this slowdown is being caused by higher mortgage rates and tighter household budgets. London and other southern areas saw particularly dramatic drops.
Uk’s Northern Ireland
Northern Ireland saw its average house prices fall year-on-year by only 1.1% year in December, contrary to much of the rest of the UK. Estate agents attribute this positive development to decreasing mortgage rates and rising incomes as key contributors.
Robert Gardner, Nationwide chief economist stated: “Housing market activity has remained weak in 2023, with total transactions remaining around 10% lower than pre-pandemic levels over the last six months and those involving mortgages down even further due to higher borrowing costs.”
He noted, however, that lower interest rates could bring “some return of confidence in the market”. Furthermore, recent statistics reveal that rate rises implemented early 2022 will have resulted in mortgage payments exceeding 40% of take-home pay for many first-time buyers.
Scotland
Nationwide mortgage lender recently reported that UK house prices fell 1.8% annually between December 2014 and December 2015, surpassing economist predictions of 1.4% decrease. This drop followed months of rising borrowing costs as the Bank of England raised interest rates to combat high inflation.
Recent changes to interest rate rises have reduced mortgage costs and restored some confidence among buyers, according to estate agents. Mortgage approvals for home purchases have also seen an uptick recently – suggesting activity hasn’t yet stalled as revealed by property website Zoopla data.
Price decline has left UK properties 4.5% below their peak level in late summer 2022. Nationwide predicts house prices to remain flat or fall over 2019, though less significantly than Halifax who predicted prices could decline by up to 2% to 4%; an avalanche of available houses to sell also have an impactful effect.
East Anglia
Nationwide Mortgage Lender’s estimates show a slow and gradual end to 2023 for UK housing market saw average house prices decline by 1.8% year-on-year – less severe than what many experts had anticipated as prices declined from their summer peak by 4.5% year-on-year.
Nationwide’s data demonstrates that Northern Ireland and Scotland defied expectations by seeing prices rise, while in England prices decreased across most areas except Yorkshire & the Humber and London. Northern England (comprising the North, North West, Yorkshire & Humber and East Midlands) experienced flat yearly prices compared to Q4 2022 while southern England (comprising South West, Outer South East Outer Metropolitan London East Anglia regions) witnessed a 3.4 per cent year-on-year decrease.
Mr Gardner stated, “A rapid rebound in activity or prices this year appears unlikely”. While cost-of-living pressures have eased and inflation has lagged wage growth, consumer confidence remains weak and surveyors continue to report subdued levels of new buyer inquiries. According to property transaction figures for Q1, mortgaged home sales had declined by around 10% year on year compared with sales over this time frame in 2015.
London
House prices have experienced significant drops for several reasons. High mortgage rates have reduced demand as more borrowers struggle to afford monthly repayments; more homes on the market than previously has increased supply, giving buyers greater bargaining power and giving buyers greater bargaining power over prices.
Nationwide’s annual figures demonstrate that UK house prices fell 1.8% year-on-year in 2023 compared with 2022 and 4.5% below their all-time peak recorded during late summer 2022. Northern Ireland and Scotland saw price increases over this time.
Rightmove and Halifax also show annual falls; however, Rightmove’s figures are calculated using asking prices rather than confirmed sales; Nationwide and Halifax use mortgage lending data to track actual house sales which provides more accurate figures. Unfortunately, even with this reduction in prices mortgage interest rates still remain high making housing unaffordable for many borrowers.