House Prices See Biggest Annual Fall in the Last Decade

By Samhita

The UK house prices fell by 1.1% from February 2022 to February 2023, as higher mortgage rates and living costs made houses less affordable. Apart from a small drop at the start of the pandemic, this is the first annual fall in property values since 2012.

“Economicheadwindslooksettoremain relativelystrong,withthelabourmarketwidely expectedtoweakenastheeconomyshrinksin thequartersahead,”saiditschiefeconomist, RobertGardner.Hepredictedpropertyprices wouldfallby5-6%fromtheirpeakinAugust 2022.

The price of an average property has decreased by almost £1,000 since January 2023 and 3.7% lower than its peak in August 2022. This can be tied to rising mortgage rates last year as the Bank of England put up interest rates to tackle the high cost of living. After Liz Truss’s mini-Budget in September, the mortgage rates through financial markets into chaos. UK approved 39,637 mortgages for house purchases in January, the lowest number since 2009.

People were holding off buying new homes since they expected house prices to drop further. Pantheon Macroeconomics reckons house prices will fall over the next few months to about 8% below their peak

Capital Economics said that “even if buyer volumes have recovered, the amount they can spend on a new home has been reduced by higher mortgage rates”.

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