UK house prices fall at fastest rate since 2009 – Nationwide

Published by

Peter Davison

Nationwide charts the monthly rise and fall in house prices

House prices in the UK fell 5.3 per cent in August compared with the same month last year – the fastest annual drop in 14 years – according to figures published on Friday by Swindon-headquartered building society Nationwide.

The lender said the fall – the biggest since the financial crisis in 2009 – was driven by soaring mortgage costs, which are deterring buyers.

The fall meant average house price is £259,153 – £14,500 lower than a year ago.

The mutual also revealed that mortgage approvals are down a fifth on pre-pandemic levels. First-time buyer numbers were down 25 per cent.

And it said the number of completions of house sales was down 20 per cent in the first half of the year compared with 2019, and about 40 per cent down against 2021 when low interest rates and the implementation of a stamp duty holiday led to a sales boom.

Robert Gardner, chief economist at Nationwide, said: "The softening is not surprising given the extent of the rise in borrowing costs in recent months, which has resulted in activity in the housing market running well below pre-pandemic levels.

"Mortgage approvals have been around 20 per cent below the 2019 average in recent months and mortgage application data suggests the weakness has been maintained more recently.

Visit Hampshire Biz News for bright, upbeat and positive business news from the county

“Nevertheless, a relatively soft landing is still achievable, providing broader economic conditions evolve in line with our – and most other forecasters’ – expectations.

“In particular, unemployment is expected to remain low – below five per cent – and the vast majority of existing borrowers should be able to weather the impact of higher borrowing costs, given the high proportion on fixed rates, and where affordability testing should ensure that those needing to refinance can afford the higher payments.

“While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time, especially if mortgage rates moderate once Bank Rate peaks."

Peter Davison

Peter Davison is deputy editor of The Business Magazine. He has spent his life in journalism – doing work experience in newsrooms in and around Bristol while still at school, and landing his first job on a local newspaper aged 19. By 28 he was the youngest newspaper editor in the country. An early advocate of online news, he spent the first years of the 2000s telling his bosses that the internet posed both the biggest opportunity and greatest threat to the newspaper industry and the art of journalism. He was right on both counts. Since 2006 he has enjoyed a career as a freelance journalist. He lives in rural Wiltshire with one wife, two children, and three cats.