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.
Andrew Wishart, senior property economist at Capital Economics, believes this “marks the start of a significant further drop in house prices”.
Advertisement
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.
Analysis: For many, house prices can’t fall far enough
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.
Average rates for two and five-year fixed residential mortgages remain above 6%.
Please use Chrome browser for a more accessible video player
2:46
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.
European leaders who make up the ‘coalition of the willing’ are set to hold a conference call on Sunday – ahead of crunch talks between Donald Trump and Ukraine’s Volodymyr Zelenskyy next week.
The coalition – co-chaired by Sir Keir Starmer, France’s President Emmanuel Macron and Germany’s Chancellor Friedrich Merz – has the aim of bringing countries together to protect a peace deal in Ukraine.
Top of the agenda at Sunday’s meeting will be securing a concrete commitment from Mr Trump on a security guarantee that would act as a powerful backstop in any Russia-Ukraine peacekeeping arrangement.
European leaders seemed buoyed by the US president’s most recent hints on the subject, in the knowledge that US military might is likely to deter Vladimir Putin from advancing in the future.
They will also discuss how to bring Mr Zelenskyy into talks after Mr Trump and Mr Putin’s Alaska meeting saw him left out in the cold.
Image: The Russian and US presidents met in Alaska on Friday. Pic: AP
Image: Volodymyr Zelenskyy. Pc: Reuters
In coordinated statements, European leaders said Mr Zelenskyy must play a greater role in future talks, and that peace cannot be achieved without him.
The hard bit will be to persuade the unpredictable US administration to change its approach, something that has proved almost impossible in the past.
Please use Chrome browser for a more accessible video player
5:55
Trump and Putin’s body language analysed
When Mr Trump re-entered the White House and made it clear the US would no longer provide a blank cheque to protect peace in Europe, others decided they had to step up, and the ‘coalition of the willing’ was thrown together in March.
Since then, information about the allied peacekeeping effort has been patchy, but we know it includes over 30 countries, which have been asked to pledge whatever military support they can, including troops.
Please use Chrome browser for a more accessible video player
In a small hut next to Newlyn Harbour at the bottom of Cornwall, the next generation of fishermen are quite literally learning the ropes.
Around a dozen students are on the eighth day of a two-week intensive course to become commercial fishers.
From knot and ropework to chart plotting, navigation to sea survival, by the end of the course they’ll be qualified to take a berth on a vessel.
While many are following in the footsteps of their fathers, others are here to try an entirely different career.
Image: Elliot Fairbairn
Elliot Fairbairn, 28, is originally from London and has been working as a groundworker.
“I’m not from a fishing family – I just like a challenge,” he says.
He’s put his current job on hold to see how fishing works out.
More on Cornwall
Related Topics:
“It makes you feel good doing a hard job.I think that’s what’s getting lost these days, people want an easy job, easy money and they don’t understand what it takes to be successful. Sometimes you’ve got to put that in the work.”
Elliot already has a job lined up for next week on a ring-netter boat.
“I’m ecstatic – I’m very pumped!” he tells me.
Image: Students take part in a two-week intensive course to become commercial fishers
Also on the course is 17-year-old Oscar Ashby. He’s doing his A-Levels at Truro College and training to be a healthcare worker at the main hospital in Cornwall.
“I’m part of the staff bank so can work whatever hours I want – which would fit quite well if I wanted to do a week’s fishing,” he says.
It’s his love of being outside that has drawn him to get qualified.
“It’s hands-on, it’s not a bad way to make money. It’s one of the last jobs that is like being a hunter-gatherer really – everything else is really industrialised, ” Oscar says.
The course was over-subscribed.
The charity that runs it – Seafood Cornwall Training – could only offer places to half those who applied.
‘A foot in the door’
“The range of knowledge they’re gathering is everything from how to tie a few knots all the way on how to register with HMRC to pay and manage their tax because they’d be self-employed fishermen,” manager Clare Leverton tells me.
“What we’re trying to do with this course is give them a foot in the door.
“By meeting our tutors, skippers on the quay, vessel managers, they start to understand who they’re going to have to talk to to get jobs.”
Getting fresh blood into the industry is vital.
Over the last 30 years, the number of fishermen in the UK has nearly halved – from around 20,000 to 10,000.
The average age of a fisherman in the UK is 55.
Aging workforce
Image: Mike Cohen, chief executive of the National Federation of Fishermen’s Organisations
“I think we’re seeing the effects of having an aging workforce,” says Mike Cohen, chief executive of the National Federation of Fishermen’s Organisations (NFFO).
“Fishing is a traditional occupation in most places around the country. A lot of family businesses, and as people are getting older, they’re starting to retire out of the industry.”
The decline comes at a time of frustration and anger in the industry too.
Many feel the prime minister’s post-Brexit deal with the EU back in May sold fishing out by guaranteeing another 12 years of access to EU boats to fish in UK waters, rather than allowing it to be negotiated annually.
“A large part of the effort the EU exerts in UK waters is within our territorial waters, so within 12 miles of the shore. And that’s the area that’s most pressured,” adds Mr Cohen.
“For new people getting into the industry it’s the area that they can reach in the sort of small boats that new starters tend to work in. They’re increasingly pressured in that space and by keeping all of those European boats having access to it for free, for nothing, that puts them under even more pressure.”
The government says it will always back “our great British fishing industry” and insists the EU deal protects Britain’s fishing access.
‘A brilliant career’
To further promote getting young people into commercial fishing, the Cornwall Fish Producers Organisation has helped set up the Young Fishermen Network.
Skipper Tom Lambourne, 29, helped set up the group.
“There’s not enough young people coming into it and getting involved in it,” he says.
“It’s actually a brilliant career. It’s a hard career – you do have to sacrifice a lot to get a lot out of fishing – your time is one of them. But the pros of that certainly outweigh it and it’s a really good job.”
Image: Tom Lambourne, from the Young Fishermen Network
Tom says the network supports new fishers by holding social events and helping them find jobs: “There’s never been a collective for young fishermen.
“For a youngster getting into the fishing industry to be sort of part of that – knowing there’s other youngsters coming in in the same position – they can chat to one another, it’s pretty cool really.”
A man was ejected from Anfield after reports of racial abuse directed at Bournemouth winger Antoine Semenyo during the season’s opening Premier League game against Liverpool.
Match referee Anthony Taylor paused play in the 29th minute after Semenyo accused a spectator of racist abuse.
An anti-discrimination message was read out to the Anfield crowd, and it is understood that police officers went into the referee’s room at half-time.
Merseyside Police said an investigation is under way after the 47-year-old man’s identity was confirmed and he was removed from the ground.
Chief Inspector Kev Chatterton, the match commander for the Liverpool v Bournemouth game, said: “Merseyside Police will not tolerate hate crime of any form.
“We take incidents like this very seriously, and in cases like this we will be proactively seeking football banning orders, with the club, against those responsible.”
He added: “There is no place for racism and it is vital that anyone who witnesses such an offence reports it to stewards, or the police immediately, so we can take the necessary action like we did this evening.
More on Racism In Football
Related Topics:
“As with all matches, we work very closely with both Liverpool and Everton FC to ensure the safety of the public, and the players.”
A spokesperson for Liverpool said the club was “aware of an allegation of racist abuse made during our Premier League game against Bournemouth”.
Image: Semenyo with his teammates during the match. Pic: PA
The Liverpool spokesperson said: “We condemn racism and discrimination in all forms, it has no place in society, or football.
“The club is unable to comment further as tonight’s alleged is incident is the subject of an ongoing police investigation, which we will support fully.”
After the incident, Semenyo scored twice in the second half to help bring Bournemouth back from two goals down at Anfield before Liverpool went on to eventually win the contest 4-2.
Bournemouth captain Adam Smith told Sky Sports News afterwards: “It shouldn’t be happening. I don’t know how Ant’s played on to be honest and come up with those goals. It’s totally unacceptable.
“Something needs to be done. Taking the knee isn’t having an effect. We’re supporting him and hopefully he’ll be OK.
“I wanted him to react because that’s what I would have done, but this shows what type of man he is…to come up with those goals showed the type of guy he is.
“To be fair the Liverpool players were very supportive as well towards Antoine and the rest of the team. It was handled in the right way but… so angry.
“I don’t know what else we can do. No one’s getting it. I don’t know what to say anymore. I just feel for Ant… shocking.”
The Premier League said in a statement that its “on-field anti-discrimination protocol” had been followed and the incident “will now be fully investigated”.
“We offer our full support to the player and both clubs,” it added. “Racism has no place in our game, or anywhere in society. We will continue to work with stakeholders and authorities to ensure our stadiums are an inclusive and welcoming environment for all.”
The Football Association said it was “concerned” about the allegation of racism towards Semenyo and that it would ensure “appropriate action” would be taken.
The incident comes two days after Tottenham Hotspur player Mathys Tel faced racist abuse online following a missed penalty in his team’s UEFA Super Cup victory over Paris Saint-Germain.