House prices in the UK have fallen at their fastest rate since July 2009, according to Nationwide’s latest house price index.
Nationwide reported this morning (August 1) that the average house price fell by 3.8 per cent year-on-year in July, the biggest drop since 2009.
This represented a fall of 0.3 percentage points when compared to June when the annual change was -3.5 per cent.
Nationwide chief economist, Robert Gardner, described the annual change in July as "the weakest outturn since July 2009", despite being only "modestly lower" than the change recorded in June.
Gardner added that, as a result of the 0.2 per cent fall, the price of a typical home is now 4.5 per cent below the August 2022 "peak".
Nationwide also reported that the monthly index in July reached 516.6, a slight fall from the 517.8 that was recorded in June.
The industry's reaction
The Mortgage Hut managing director, Nicola Schutrups, said this news came as "no surprise" and added that further falls in house prices are "likely" for the rest of 2023.
She added that if inflation continues to come down and the jobs market remains strong, "there's still a chance for a soft landing".
Additionally, The Kushman Group director, Kundan Bhaduri, commented: "At long last the ongoing fall in house prices will achieve what many have been waiting for.
"This decline is helping improve affordability for first-time buyers, who have been struggling to enter the market due to high deposit requirements and rising costs of living."
Bhaduri added that the slowdown in house price growth was a "long time coming" and that it represented a "perfect opportunity" to rebalance the market and prevent a "potential bubble".
However, InvestingReviews.co.uk equity analyst, John Choong, warned that the HPI indicated "further weaknesses" in the housing market as house prices "continue to sink" on the back of higher mortgage costs.
Looking to the future, LargeMortgageLoans.com CEO, Paul Welch, said that core inflation will "determine where we go from here" and stated that's "hopefully that’s not too far up on the rate front", as the base rate rises to date have already materially impacted affordability.
"Housing prices will continue to correct after sustained rises inflated by the government during Covid," he added.
tom.dunstan@ft.com
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