The UK housing market has recorded its first annual price decline since 2019, with new data revealing how soaring mortgage costs are finally cooling the property boom.
According to Rightmove's latest House Price Index, the average asking price for homes dipped 0.2% year-on-year in July - the first negative annual change the property portal has recorded in over three years.
Mortgage Shock Dampens Market Activity
The figures highlight how the Bank of England's aggressive interest rate hikes - taking the base rate to 5% - are impacting buyer demand. Average mortgage rates have nearly doubled compared to last year, with many prospective homeowners being priced out of the market.
"We're seeing clear evidence that affordability constraints are biting," said Rightmove's director of property science. "While prices remain resilient in some areas, the overall trend shows buyers becoming increasingly cautious."
Regional Variations Emerge
The slowdown isn't uniform across the country:
- London asking prices fell 0.5% annually
- The North West saw a modest 1.1% increase
- Wales recorded a 0.2% decline
This regional variation suggests local economic factors and housing supply continue to influence market performance despite national trends.
What This Means for Buyers and Sellers
For potential buyers, the slight price dip offers little comfort against dramatically higher borrowing costs. Experts warn the market may need to adjust further before affordability improves significantly.
Sellers are being advised to price competitively, with properties taking longer to sell than during the pandemic boom. The average time to secure a buyer has increased to 55 days, up from 32 days a year ago.
As the Bank of England considers further rate rises to combat inflation, the property market faces continued uncertainty heading into the autumn.
