UK House Prices Witness Biggest Drop Since 2009

UK house prices saw the biggest drop since 2009 in the last 12 months up to May, according to mortgage lender, Nationwide. The housing market faces more challenges as borrowing costs rise.

Compared to May last year, the average house price fell by 3.4%, following a 2.7% decline in April. This is the largest year-on-year (YoY) drop since the 2009 global financial crisis.

In May, house prices slipped by 0.1% compared to April’s 0.4% increase, according to Nationwide. Earlier this year, the UK housing market showed signs of recovery after mortgage rates surged due to proposed tax cuts.

However, higher-than-expected inflation figures caused bond yields to rise, leading to projections of more interest rate increases by the Bank of England. Resultantly, some lenders adjusted their mortgage offers.

Nationwide’s Chief Economist, Robert Gardner, warned that the housing market could face stronger obstacles in the near future due to sustained borrowing costs and mortgage rate increases. However, he remained optimistic, citing a stable labor market and healthy household finances.

An Economist from the EY Item Club, Martin Beck, noted that the 4% decline in house prices since the peak in August last year was moderate compared to the 7% increase over the past two years.

Around 2.5 million homeowners with fixed-rate deals can expect rising costs for the rest of 2023. Beck also predicted that the Bank of England may continue raising borrowing costs, further pushing down house prices.

Analysts at Capital Economics projected an 8% decline in prices, while Pantheon Macroeconomics anticipated a 4% drop. These predictions highlight the ongoing challenges the UK housing market is expected to face in the coming months.

Follow ProPakistani on Google News & scroll through your favourite content faster!

Support independent journalism

If you want to join us in our mission to share independent, global journalism to the world, we’d love to have you on our side. If you can, please support us on a monthly basis. It takes less than a minute to set up, and you can rest assured that you’re making a big impact every single month in support of open, independent journalism. Thank you.

Crafts international and UAE news into concise pieces, catering to today's busy readership.

Get Alerts

Follow ProPakistani to get latest news and updates.

ProPakistani Community

Join the groups below to get latest news and updates.