If mortgage lenders, real estate platforms and Government statisticians agree on one thing, it is that the air has been let out of the housing market.
Back in November, the average house price in the UK hit a record high £292,552, according to the Office for National Statistics, having risen every year for a decade.
Pent-up demand from the pandemic was largely responsible for 2022’s surge – during which prices increased by just under 10 percent. This has now changed dramatically.
Nationwide found asking prices had fallen by 3.4 percent in the year to May, the sharpest decline the building society had observed since July 2009.
Halifax found property was going for £3,000 less on average last month relative to the year before. Behind this nationwide figure, however, some areas have seen the value of bricks and mortar collapse.
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According to real estate website Zoopla, nowhere in the UK have house prices fallen the most over the past year than Aberdeen.
Their May House Price Index shows property in the North Sea petroleum hub is now 2.2 percent cheaper than it was in May 2022 – equivalent to a drop of £3,110.
Scotland’s third-largest city was followed by Sunderland (-1.5 percent) and the boroughs of Tower Hamlets (-1.5 percent) and Hackney (-1 percent) in London. Per UK region, Scotland saw the biggest dip, at -3.1 percent.
In monetary terms, homes in Camden experienced the biggest loss in value – now £6,990 cheaper than they were a year ago.
The Treasury and Bank of England’s (BoE) chief priority over the past year has been to bring down inflation. In April, the Consumer Price Index (CPI) slowed by less than forecast, to 8.7 percent.
As a result, the BoE is expected to continue hiking the interest rate – which has now been raised 12 times consecutively to 4.5 percent – pushing up mortgage rates further in turn.
Director of Halifax Mortgages Kim Kinnaird said: “With consumer price inflation remaining stubbornly high, markets are pricing in several more rate rises that would take Base Rate above five percent for the first time since the start of 2008.
“Those expectations have led fixed mortgage rates to start rising again across the market.
“This will inevitably impact confidence in the housing market as both buyers and sellers adjust their expectations, and latest industry figures for both mortgage approvals and completed transactions show demand is cooling. Therefore further downward pressure on house prices is still expected.”
