According to the most recent data from the Nationwide, home values plunged in March at a rate that was the quickest yearly pace seen in the last 14 years.
The lender reported that prices were down 3.1% when compared to the same time period the previous year, which was the greatest annual reduction since July 2009.
After the instability that occurred on the financial markets as a result of the mini-budget, The Nationwide stated that the housing market had reached a “turning point” in the previous year.
The report continued by saying that since then, “activity has remained low.”
Robert Gardner, the chief economist at Nationwide, stated that “it will be hard for the market to regain much momentum in the near term” because consumer confidence is still low and household budgets continue to be put under pressure by high inflation. “It will be hard for the market to regain much momentum in the near term.”
Potential first-time buyers have seen home values continue to rise even while the pandemic was ongoing, so they would likely be pleased to hear that house prices are beginning to fall.
Yet, the fact of the matter is that the cost of renting has increased for a good number of individuals, and the interest rates on mortgages are greater than they may have anticipated. The persistent increase in the cost of many routine expenditures as well as the cost of food is another factor that is contributing to the growing financial hardship.
According to the findings of Nationwide, which were derived from the organization’s own data on loans, prices have now declined for seven months in a row. This finding is consistent with the general conclusion that other house price surveys and commentary have reached, which is that the housing market as a whole is experiencing a slowdown and falling prices.
The Office of Budget Responsibility, which provides the government with advice regarding the state of the economy, made a prediction back in March that housing prices will fall by 10% between the peak they reached the previous year and the middle of the following year.
After taking into consideration the effects of seasonal factors, the Nationwide stated that prices were already 4.6% lower than their all-time high.
“What is clear is that the red-hot property market of pandemic days – when buyers snapped up bigger homes in the race for space, aided by temporary stamp duty incentives – is now behind us,” said Alice Haine, an analyst at the investment platform Bestinvest. “Buyers and lenders are taking a far more conservative approach towards home ownership.”
Concerns regarding the levels of interest charged on mortgages are one of the primary contributors to the downturn in the sector. Following the mini-budget that was presented by the government that Liz Truss led for a brief period of time, rates skyrocketed.
Even though they have gone down a little bit since then, the interest rates on home loans are significantly higher now than they were when people were getting used to the rates in the previous decade. This is due to a string of base rate increases that have been implemented by the Bank of England.
Although the housing market in the UK is comprised of a number of local property sectors, the Nationwide’s geographical analysis for the first three months of the year revealed that there was a slowdown across the board in every region of the country.