The UK housing market has recorded its steepest annual decline in over a decade, with prices dropping by 3.8% in July compared to the same period last year, according to Nationwide Building Society. This marks the most significant slump since the 2009 financial crisis, as soaring mortgage rates and persistent inflation deter potential buyers.
What’s Driving the Decline?
Robert Gardner, Nationwide's chief economist, pointed to rising borrowing costs as the primary factor behind the downturn. "Affordability remains stretched for many households," he said, noting that mortgage rates have climbed sharply since last year. The Bank of England’s aggressive interest rate hikes—aimed at curbing inflation—have further strained the market.
Regional Variations
While the national average shows a clear downturn, some regions have fared worse than others. London and the South East, traditionally the most expensive areas, have seen the most pronounced corrections. Meanwhile, more affordable northern cities have shown greater resilience.
What Does This Mean for Buyers and Sellers?
For first-time buyers, the dip in prices could offer a rare opportunity—provided they can secure financing. However, sellers may need to adjust expectations, as properties are taking longer to shift. Experts warn that the market could remain sluggish until inflation eases and mortgage rates stabilise.
Key takeaways:
- Average UK house price now stands at £260,828, down from £271,000 a year ago.
- Monthly prices fell by 0.2% in July, continuing a downward trend.
- Economists predict further declines if interest rates keep rising.
