Fifth Monthly Drop In House Prices

February 1, 2023

House prices in the UK have fallen for the fifth consecutive month, the BBC reports. The latest figures for January released by the Nationwide Building Society show a decrease of 0.6%, compared to December 2022. The annual figures for January show a growth of 1.1%, a decrease from 2.8% in December 2022.

This represents the lowest rate of growth since June 2020, when the market had been effectively shut down by the Covid pandemic. The average UK house price currently stands at £258,297, which is almost £4,000 lower than in December.

The spike in mortgage rates in September 2022 is given as the reason for some of the slowdown, although rates are starting to fall back to more usual levels. The sharp increase in the cost of living means that many householders and would-be first time buyers are putting off the decision to move.

Robert Gardner, chief economist at Nationwide, commented: “It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks.”

The Bank of England is set to raise interest rates for the 10th consecutive time in a row, taking them up half a percentage point to 4% in a bid to tackle spiralling inflation. This would be the highest level since the financial crisis of 2008. However, experts predict that interest rates will not rise much further than this, and mortgage rates will continue to fall this year.

Nationwide senior economist Andrew Harvey told the BBC: “Longer-term interest rates have started to edge down and should we see that continue, that should feed into lower mortgage prices and provide some easing in the affordability pressures.”

However, as the BBC points out, it can be misleading to just look at the national picture when it comes to house prices and mortgage rates. There is a great deal of regional variation, and even different neighbourhoods with the same city can have a wide disparity in prices.

Mortgage affordability in relation to take home pay also plays a part in the regional picture. House prices are highest in London and south east England, but in cheaper areas in the North and Scotland, mortgage payments as a share of take home pay are at the highest level. 

All of this rather contradictory news may be confusing for anyone looking to buy their first property in 2023. This may be especially true for anyone who has a less than perfect credit history because this can make it difficult to get a mortgage offer. However, it may be more possible than you might think with the right advice.

Whatever your circumstances, before applying for a mortgage it is important to do your research first to present your case in the best light and give yourself the best chance of being accepted. If you would like to talk to IVA mortgage specialists, please get in touch today.

Your home may be repossessed if you do not keep up with your mortgage repayments.

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