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House prices fell by 5.3% in the year to August – a bigger-than-expected drop, according to Nationwide.

This means the typical home is now worth £14,600 less than 12 months ago – with an average property price of £259,153.

Nationwide’s chief economist, Robert Gardner, says the softening is “not surprising” – with interest rate hikes by the Bank of England sending mortgage payments higher.

Activity in the housing market is currently running well below pre-pandemic levels – with mortgage approvals about 20% below the 2019 average in recent months.

But Mr Gardner struck an upbeat note after Nationwide’s latest House Price Index was released – and said “a relatively soft landing is still achievable.”

He added: “In particular, unemployment is expected to remain low (below 5%) 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.”

And while activity may remain subdued in the near term, Mr Gardner believes a mix of income growth and lower house prices could improve affordability if mortgage rates cool.

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Andrew Wishart, senior property economist at Capital Economics, believes this “marks the start of a significant further drop in house prices”.

He believes that, by mid-2024, house prices will be 10.5% below their August 2022 peak – with mortgage rates set to remain between 5.5% and 6% for the next 12 months.

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Paul Kelso - Health correspondent

Paul Kelso

Business correspondent

@pkelso

The UK housing market has long lost touch with reality – but the recent modest fall in prices, confirmed by the Nationwide house price index figures for August, does follow the logic of economic trends.

After 14 consecutive Bank of England increases pushed the base rate to 5.25% and many mortgages beyond 6%, it would have been a surprise had the housing market not been affected.

While prices have been falling the volume of completions has stalled too, reflecting perhaps that many potential movers are waiting to see where rates will peak before they take the plunge.

For those looking to sell or buy from an existing home the impact will be largely theoretical, with the cost of remortgaging and the swingeing impact of stamp duty far more consequential in decision making.

A drop of more than 5% will be most welcome to first-time buyers, but the benefit will likely be wiped out by the increased cost of the mortgage required to get on the ladder in the first place.

For millions, prices cannot fall far enough to make that first step realistic, the hike in borrowing costs compounding an affordability crisis that has seen the average house price balloon to eight times the average wage in two decades.

According to Nationwide, there was a 25% drop in first-time buyers in the first half of 2023 when compared with 2019.

“A first-time buyer earning the average wage and buying a typical first-time buyer property with a 20% deposit would now see their monthly mortgage payment absorb over 40% of their take-home pay (with a mortgage rate of 6%) – well above the long run average of 29%,” Mr Gardner added.

There has also been a shift in the types of properties being purchased – with a big decline in demand for detached houses as buyers look for smaller, less expensive places.

Additional housing bills are piling more misery on families at a time when the main measure of inflation is easing back from the highs of last winter, when unprecedented energy costs hit Western economies.

The evolving cost of living crisis has squeezed affordability and demand at estate agents – and the Bank wants a wider economic slowdown to help cool the pace of price rises.

Data released by the Bank earlier this week showed that mortgage approvals had dropped by almost 10% last month.

Separate figures from property website Zoopla suggested that the UK was on track for about one million house and flat sales by the end of this year – the lowest level since 2012.

Average rates for two and five-year fixed residential mortgages remain above 6%.

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Renters now in the majority in UK

Higher funding costs for lenders are down to expectations the Bank of England still has some way to go in its battle against inflation.

Financial markets currently expect the Bank’s rate to peak just shy of 6% early next year – from its current level of 5.25%.

Nationwide, like other mortgage lenders in the shifting rate environment, revealed on Thursday that it was reducing some fixed and tracker products by up to 0.15 percentage points from today.

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Man arrested over wildfire that triggered ‘major incident’ in Northern Ireland

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Man arrested over wildfire that triggered 'major incident' in Northern Ireland

A man has been arrested by police investigating a “significant” wildfire that triggered a major incident in Northern Ireland.

More than 100 firefighters and 15 fire appliances were deployed on Saturday to Sandbank Road, Hilltown, to tackle the blaze which is believed to have been caused deliberately, fire chiefs said.

Northern Ireland Fire and Rescue Service (NIFRS) said the fire had a front of approximately two miles “including a large area of forestry close to property”.

It was extinguished at 2.53am on Sunday and the major incident status lifted, the NIFRS said.

“The cause of this fire is believed to have been deliberate,” chief fire and rescue officer Aidan Jennings said.

The Police Service of Northern Ireland said on Sunday that a 25-year-old man had been arrested “on suspicion of arson being reckless as to whether life would be endangered, and non-related driving offences”.

“He remains in custody at this time as enquiries continue into the circumstances surrounding the fire,” the force added.

A wildfire broke out in Northern Ireland. Pic: Sky Watch NI
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The wildfire on Sandbank Road, Hilltown. Pic: Sky Watch NI

A wildfire broke out in Northern Ireland. Pic: Sky Watch NI
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More than 100 firefighters were at the scene of the fire. Pic: Sky Watch NI

Various fires erupted across England this week amid uncharacteristically warm and dry conditions for the time of year.

On Saturday, helicopters were deployed to tackle Scotland’s fourth wildfire this week, with police saying a blaze “which started in the Newton Stewart area has spread northwards and is expected to reach the Loch Doon area of East Ayrshire around 12am on Sunday”.

Police Scotland added: “As a precautionary measure members of the public are asked to avoid the Loch Doon area and anyone who may be camping in the area is advised to leave.”

Dorset wildfires
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Moors Valley Country Park blackened by fires this week

Elsewhere in England, Devon and Cornwall Police said they were assisting the fire service with temporary road closures on the A30 in the Bolventor area as they tackle “a number of fires” on moorland.

In Dorset, Moors Valley Country Park was forced to close after multiple wildfires broke out there on Wednesday.

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Wildfires spread across nature reserve

Separate incidents were then reported at Upton Heath in Poole on Wednesday, and nearby Canford Heath in the early hours of Thursday.

Friday was officially the warmest day of the year so far – with temperatures in the south of England reaching 23C (73.4F) – the highest since 21 September last year, according to the Met Office.

The weather conditions triggered a “severe” wildfire rating for parts of the UK on Tuesday.

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Man shot dead in Stanley, County Durham

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Man shot dead in Stanley, County Durham

Police are investigating after a man was shot dead in County Durham.

Officers were called to an address in Elm Street, Stanley, at about 5.20pm on Saturday after reports of a “disturbance”, Durham Constabulary said.

A man in his 50s was found to have been shot and despite the efforts of paramedics he was pronounced dead at the scene.

His family have been told and are being supported by specially trained officers.

Specialist crime scene investigators are at the scene, and officers are carrying out house-to-house enquiries.

A cordon is in place and is expected to stay there for some time.

Detective Superintendent Neil Fuller said: “This is a truly shocking incident in which a man has been shot and has sadly died.”

He added: “Residents may see an increased police presence in the area. I would like to thank them for their support while we carry out this investigation.

“Our thoughts are with the man’s family at this time.”

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Durham Constabulary has urged anyone who witnessed the incident or has dashcam footage or CCTV to contact the force.

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Furious row after Labour MPs denied entry to Israel – as Lammy criticises ‘disgraceful’ Badenoch response

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Furious row after Labour MPs denied entry to Israel - as Lammy criticises 'disgraceful' Badenoch response

A furious political row has broken out after two Labour MPs were denied entry to Israel and deported after being accused of planning to “spread anti-Israel hatred”.

Yuan Yang and Abtisam Mohamed were rejected because they were suspected of plans to “document the activities of security forces and spread anti-Israel hatred”, according to a statement from the Israeli immigration ministry.

Ms Yang, who represents Earley and Woodley, and Ms Mohamed, the MP for Sheffield Central, both flew to the country from Luton on Saturday – and later said they were “astounded” by their treatment.

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The Israeli immigration ministry said the MPs were accompanied by two assistants on the trip and during questioning, they claimed they were visiting Israel “as part of an official parliamentary delegation”.

But Israeli officials said immigration officers found “no evidence to support the claim… they were travelling as part of an official delegation”. “No politicians or government officials were aware they were coming,” they added.

The Council for Arab-British Understanding (CAABU) contradicted Israeli officials, saying the women were part of a “parliamentary delegation” on a trip organised by them and Medical Aid for Palestinians (MAP).

Conservative leader Kemi Badenoch told Sunday Morning With Trevor Phillips she was “not surprised” the MPs were detained and that “every country should be able to control its borders, and that’s what Israel is doing, as far as I understand”.

She said she was “very concerned” about the “rhetoric” on the Middle East from Labour MPs and six independents, and claimed there is “a lot of repeating of misinformation, repeating of conspiracy theories” during Prime Minister’s Questions.

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Tory leader backs Israel over deported MPs

UK Foreign Secretary David Lammy criticised Ms Badenoch’s comments, writing in a post on X: “It’s disgraceful you are cheerleading another country for detaining and deporting two British MPs. Do you say the same about Tory MPs banned from China?.”

Ms Badenoch retorted, saying: “Unlike China, Israel is our ally and a democracy. A good Foreign Sec would be able to make that distinction.”

One of Ms Badenoch’s ministers Richard Fuller appeared to contradict her, however, telling Times Radio: “Any member of Parliament who goes on an official trip should be, I would think, welcomed in any country.”

Chair of the foreign affairs select committee Emily Thornberry MP described Israel’s treatment of the two women as an “insult to our country and to Parliament”.

In a joint statement, Ms Yang and Ms Mohamed said they were “astounded at the unprecedented step taken by the Israeli authorities”.

“It is vital that parliamentarians are able to witness, first-hand, the situation in the occupied Palestinian territory,” they said.

“We are two, out of scores of MPs, who have spoken out in Parliament in recent months on the Israel-Palestine conflict and the importance of complying with international humanitarian law. Parliamentarians should feel free to speak truthfully in the House of Commons, without fear of being targeted.”

They said they had travelled to “visit humanitarian aid projects and communities in the West Bank” with “UK charity partners who have over a decade of experience in taking parliamentary delegations”.

Israel’s UK embassy said the MPs were denied entry because they had “accused Israel of false claims, were actively involved in promoting sanctions against Israeli ministers, and supported campaigns aimed at boycotting the state of Israel”.

It said the women “chose not to exercise their right under Israeli law to petition the court to reconsider the decision”.

As a result, they were “offered hotel accommodation, which they declined” and their return flight was covered by the Israeli state.

“The visit was intended to provoke anti-Israel activities at a time when Israel is at war and under attack on seven fronts. Its purpose was to harm Israel and Israeli citizens and spread falsehoods about them,” the statement added.

“The state of Israel has both the authority and the duty to prevent the entry of individuals whose presence in the country is intended to cause harm to its citizens – just as such authority exists in the United Kingdom.”

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Earlier in a statement to Sky News, Mr Lammy said it was “unacceptable, counterproductive, and deeply concerning that two British MPs on a parliamentary delegation to Israel have been detained and refused entry by the Israeli authorities”.

“I have made clear to my counterparts in the Israeli government that this is no way to treat British parliamentarians, and we have been in contact with both MPs tonight to offer our support.

“The UK government’s focus remains securing a return to the ceasefire and negotiations to stop the bloodshed, free the hostages and end the conflict in Gaza.”

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Emily Thornberry says Israel has to ‘stop being so thin-skinned’ about criticism over its Gaza war.

In an interview with Sky News, Dame Emily Thornberry said her two colleagues are “highly intelligent, well informed” and “really well respected”.

“They speak on behalf of a lot of people,” said the Labour MP, warning Israel that instead of “alienating” and “humiliating” them it should “engage” with them.

She confirmed the women have landed back in the UK and that “they’ll be okay”. But she added: “I am so angry.”

Labour Friends of Israel said it was “wrong and counterproductive for Israel to refuse entry to British members of Parliament”.

“Over the years we’ve taken hundreds of MPs to Israel and Palestine; it’s vital parliamentarians are able to visit and understand the situation on the ground,” it said.

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