House prices fall for sixth month in row – but first-time buyers facing major problems, figures show
House prices have fallen for the sixth month in a row and dropped 1.1% in the year up to last month, according to one of the UK’s biggest mortgage lenders.
House price data from Nationwide building society showed it was the first annual decline since June 2020.
On a monthly basis, the price fall from January to February was 0.5% – the weakest month since November 2012.
The decline brought the average house price to £257,406 in February, down from £258,297 in January.
House prices last month were also down 3.7% from the peak of last August.
Mortgage approvals are also down, dampening demand for houses.
Official figures released today by the Bank of England on Wednesday showed net mortgage approvals decreased for the fifth month in a row, to 39,600 in January from 40,500 in December.
If the COVID-19 pandemic period is excluded, this was the lowest net approvals figure since January 2009 (32,400).
But the lower prices do not make it easier for first-time buyers, Nationwide’s chief economist said.
For a prospective first-time buyer earning the average income and looking to buy the average home, mortgage payments remain well above the long-running average share of take-home pay.
Read more
Why it’s more difficult for young people to buy a house now than it was fifty years ago
Deposit requirements remain “prohibitively high for many”, Robert Gardner said, and saving for a deposit “remains a struggle” especially for those in the private rented sector, where rents strongly increased.
The situation may improve if inflation moderates in the coming months as expected, Gardner added, as wage increases combined with declining house prices would support housing affordability.
While the market instability that followed the Liz Truss mini-budget has cleared up, Nationwide’s chief economist said housing market activity had remained subdued.
Please use Chrome browser for a more accessible video player
Data from Nationwide, the UK’s third largest lender, showed the average house cost had come down by roughly £20,000 to January 2023.
Those effects have impacted market confidence and have added to the broader economic factors weighing on households, such as double-digit inflation and falling real wages, as pay rises failed to keep pace with inflation.
The September mini-budget and associated mortgage upset was described as a “turning point for the market” by Sarah Coles, the head of personal finance at Hargreaves Lansdown.
“After withstanding months of increasingly painful inflation, buyers were at full stretch – and the mortgage market mayhem in the aftermath of the mini-budget was the final straw,” she said.
“We knew from that point that a house price correction of some kind was likely to be on the cards.”
While prices were expected to continue falling, where the housing market goes next is uncertain, said Ms Coles.
“The question is whether this is the beginning of a gradual and modest deflation, or a bubble that’s set to burst. There’s no doubt we’ll see more falls in the coming months, but overall predictions of drops come in anywhere between 5% and 12%.”
“Unfortunately, it’s getting increasingly difficult to remain optimistic.”
Business
Donald Trump tells UK to ‘get rid of windmills’ and says raising windfall tax on North Sea oil is ‘big mistake’
Donald Trump has said the UK is making “a very big mistake” in its fossil fuel policy – and should “get rid of windmills”.
In a post on Friday on his social media platform, Truth Social, Mr Trump shared news from November of a US oil producer pulling out of the North Sea, a major oil-producing region off the Scottish coast.
“The UK is making a very big mistake. Open up the North Sea. Get rid of windmills!”, the US president-elect wrote.
The Texan oil producer Apache said at the time it was withdrawing from the North Sea by 2029 in part due to the increase in windfall tax on fossil fuel producers.
North Sea oil rig. Pic: Reuters
The head of Apache’s parent company APA Corporation said in early November it had concluded the investment required to comply with UK regulations, “coupled with the onerous financial impact of the energy profits levy [windfall tax] makes production of hydrocarbons beyond the year 2029 uneconomic”.
Chief executive John Christmann added that “substantial investment” will be necessary to comply with regulatory requirements.
Mr Trump used a three-word campaign pledge “drill, baby, drill” during his successful election campaign, claiming he will increase oil and gas production during his second administration.
In the October budget announcement, UK Chancellor Rachel Reeves raised the windfall tax levied on profits of energy producers to 38%.
Called the energy price levy, it is a rise from the 25% introduced by Rishi Sunak in 2022 as energy prices soared following Russia’s invasion of Ukraine.
Many oil and gas businesses reported record profits in the wake of the price hike.
The tax was intended to support households struggling with high gas and electricity bills amid a broader cost of living crisis.
Apache is just one of a glut of firms that made decisions to alter their North Sea extraction due to the Labour policy.
Read more
Business, the economy and the pound in your pocket – what to expect from 2025
Energy bills become more expensive
Even before the new government was elected, three companies, Jersey Oil and Gas, Serica Energy and Neo Energy – announced they were delaying, by a year, the planned start of production at the Buchan oilfield 120 miles to the north-east of Aberdeen.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports9 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway