Data from Nationwide shows that house prices are down 3.1% year-on-year in March, the most significant annual decline since July 2009. In addition, all UK regions experienced slowing price growth in Q1, with only four regions ‘bucking the trend’.
UK house prices are continuing their downward trajectory, according to the latest data from Nationwide. The newly released report revealed a monthly price fall of -0.8% (the seventh consecutive monthly fall), which leaves prices 4.6% below their August peak once seasonal effects have been taken into account.
In his statement, Robert Gardner, the Chief Economist at Nationwide, said that the housing market reached a turning point last year, which resulted from financial market turbulence, followed by a mini-budget. Since then, the market activity has been subdued, and this is shown by the dramatic fall in mortgage approvals in February, which was almost 40% below the same time a year ago.
Mr Gardner also stated that it would be hard for the market to regain momentum due to weak consumer confidence and pressure on household budgets from inflation.
The Nationwide House Price Index revealed that nine out of their thirteen regions recorded annual house price falls in Q1, with Scotland being the weakest-performing region. Prices in Scotland were down by 3.1% compared to a year ago. The data shows that the weakest-performing region in England was East Anglia, the strongest region last quarter.
The regions showing a fall in prices were:
- The North West
- The North
- Wales
- Outer Metropolitan
- London
- Yorkshire
- Outer South East
- East Anglia
- Scotland
The four regions that ‘bucked the trend’ were the West Midlands, Northern Ireland, The South West and East Midlands. Although Northern Ireland was one of the regions that didn’t fall into negative territory, there has been a noticeable slowing in price growth.
The quarterly average UK house price currently stands at £258,115, with the most expensive region being London and the least expensive being the North.
Is there a turning point for the market on the horizon?
At this time, it’s difficult to see any light at the end of the tunnel for the UK property market, and the downward trend is likely to continue. The past couple of years has resulted in what many believe is an over-inflated market, and many thought a correction was necessary.
As pointed out by Robert Gardner, one of the most significant factors affecting market activity is the high cost of living, which shows few signs of going away, as shown by the recent unexpected rise in UK inflation to 10.4%. However, the number is expected to fall in the next Office for National Statistics announcement, but whether it is the start of a trend is anyone’s guess.
In addition, the global banking sector has recently experienced a huge wake-up call, which could cause some institutions to restrict lending to ensure they are well-capitalised should the problems born from a lack of consumer confidence continue and widen.
Another factor that could negatively affect the property market is the recent announcement from the UK government concerning landlords. By 2028, all rental properties must have a certified energy performance rating of C or risk a hefty fine. This might prove extremely difficult on older properties, the types favoured by many smaller buy-to-let investors, and could cause them to stop adding to their portfolios, reducing market activity further.
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