New data has revealed that house prices are down 3.1%, suggesting the largest annual decline since July 2009.
According to Nationwide building society, all regions saw a slowing in price growth, with most seeing small year-on-year falls. Prices fell faster in March than in February – down 0.8% in a month compared to a 0.5% drop in February.
Robert Gardner, Nationwide’s Chief Economist, stated that the housing market “reached a turning point last year as a result of the financial market turbulence which followed the mini-budget”. Since then, “activity has remained subdued – the number of mortgages approved for house purchase remained weak at 43,500 cases in February, almost 40% below the level prevailing a year ago”.
The research showed that West Midlands was the strongest performing region, while Scotland remained the weakest. The data shows a “further slowdown in annual house price growth in all regions”, Gardner added.
Sarah Coles, head of personal finance at Hargreaves Lansdown, commented:
“The house price slip has become a slump, with the biggest annual price drop in 14 years. The pace of descent accelerated, and we’re already almost 5% below the peak in August. Unfortunately, the indications for the future aren’t looking terribly promising either.
As a result, sellers are having to compromise in order to shift their properties. RICS says that 60% of homes worth up to £500,000 are selling for less than the asking price, and Zoopla found that 40% of home sellers are cutting their prices even before a seller comes along – by an average of 4.5%.”
Iain Swatton, head of mortgages at Dashly, however, added that “demand is still up and estate agents are reporting an increase in the number of potential buyer registrations as we see the usual ‘spring bounce’”. Despite this, “stock remains low and we need to see confidence returning in the market to get transactions moving again.”
“Interest rates won’t come down as fast as they went up,” Swatton added. “The reality is that rates have been uncharacteristically low for such a long time that borrowers have got used to this.”
Coles stated:
“There is a glimmer of hope on offer from the mortgage market. The bump in rates is likely to be a temporary blip, due to inflation coming in higher than had been expected. As we get further into the year, we’re expecting inflation to fall significantly, so we may well see rates on the way down again. Already February saw a very small pick up in the number of mortgages approved for the coming months. However, it’s still less than half the numbers we were seeing two years earlier, so you need to look very closely to see any real hope in these figures.”
