House Prices Biggest Fall in 10 Years

According to the Nationwide Building Society UK House Prices Report, their property price indicates that house prices fell by 1.1% in the year to February 2023.  This is the biggest fall in prices since 2012.

• House prices are now 1.1% lower than last February 2022 and nearly 6% lower than the property price peak in August 2022.
• The average house value according to Nationwide is now £257,406 down from £258,297 in January 2023 and £273,751 in August 2022. 

Why is the Halifax Property Index or Rightmove Asking Price Index different to Nationwide’s?

Usually both Halifax’s index and Nationwide’s index follow similar upward and downward trends although average prices will differ because the representative properties that each index tracks will be marginally different.

The Halifax Property Index for February is due on 7^th March, and we expect falls there too.  In contrast, Rightmove, in the business of selling properties, suggested average ‘Asking Prices’ just about increased between January and February 2023 by a very modest £14 at £362,452 up from £362,438 in January.

Why the House Price Downturn?

• Mortgage interest rates have increased meaning people can afford to borrow less.  Mortgage payments now take a much greater share of the average household income.
• Inflation and cost of living increases will also mean people can afford to borrow less.
• Vendors (sellers) will have to reduce prices that they are willing to accept for their properties.
• More jobs losses are expected for the currently gloomy economic backdrop, this will mean less people able to consider selling and moving on or indeed new buyers.

Comment

Average house prices are already down 5.97% from August 2022, so we expect larger negative yearly house price fall numbers of up 10% in August 2023.