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According to the most recent Nationwide data, house values declined at the highest annual rate in 14 years in March.
According to the lender, house prices were down 3.1% year on year, the largest annual loss since July 2009.
According to Nationwide, the housing market hit a “tipping point” last year when the mini-budget produced financial upheaval.
According to the study, “activity has remained modest” since then.
Prospective first-time buyers, who have watched property prices climb even during the pandemic, are usually relieved to see them fall.
Sadly, many people find that the cost of renting has increased and that mortgage rates are higher than expected. Also, bills and food prices keep increasing, making it harder to make ends meet.
Based on its lending data, Nationwide has found that prices have decreased for the past seven months. This fits with what other surveys and articles about house prices have found, which is that the market is slowing down and prices are falling.
In March, the Office of Budget Responsibility, a government group that advises on the economy’s health, said that housing prices would drop by 10% between last year’s peak and the middle of next year.
After considering things like the time of year, Nationwide said that house prices were already 4.6% lower than they were at their peak.
A big reason for the sector’s decline is worries about mortgage rates. Last year, rates increased after the Liz Truss government passed a “mini-budget.”
Even though rates have gone down a little because the Bank of England has been raising its base rate, interest rates on home loans are still higher than what people have been used to for the last ten years.
Even though the UK housing market is made up of many different local property sectors, Nationwide’s regional breakdown for the first quarter of the year showed that all parts of the country were slowing down.
Where are house prices at the moment?
In recent months, house prices have gone down because rising interest rates have made mortgages more expensive and high inflation has made it harder for people to buy things.
But mortgage interest rates may soon stop going up and down. So how might this affect the prices of homes?
From the beginning of 2020 to the end of 2022, house prices rose by about 25% in most of the UK.
Nationwide Building Society data from March shows that they have dropped by more than 4% since their highest point.
Considering seasonal highs and lows, these numbers show that Scotland had the biggest fall and the West Midlands had the smallest.
Different growth patterns over the past 15 years have led to these recent changes.
Northern Ireland’s house prices have not gotten back to where they were before the global financial crisis.
In contrast, prices in London and the South East rose quickly until 2015. After that, they went up more slowly as people moved to cheaper places during the panic over space caused by the pandemic.
What happens when the value of a property goes down?
The most immediate effect is on people who want to move.
Some sellers may need more time to get their houses on the market. In addition, homeowners who are thinking about moving may also find that they need more money.
Since asking prices haven’t gone down enough to make up for the higher cost of borrowing rates, buying a home won’t be cheaper for first-time buyers any time soon.
In the long run, housing will be more affordable if incomes rise faster than home prices recover.
Long-term changes also depend on whether or not enough houses are being built to meet demand.
Do people need help to pay their mortgages?
The Financial Conduct Authority thinks that there are more “financially stretched” mortgages in London and the South East than anywhere else in the country.
Most loans in the South are bigger than the incomes of the people who take them out. So when mortgage rates increase, or inflation hits, it might take much work to repay the debts.
This analysis is one way to find potential weaknesses in the market.
Still, there are other ways to ensure people in these places would pay their mortgages on time.
In recent years, most borrowers have been tested by interest rates that are higher than what we’re seeing now.
After the disaster of 2008, lending laws were changed to ensure that households were better ready for a tougher economy.
Read Also: House prices fall by the highest in years
The number of people who needed to catch up on their mortgage payments did not increase much in 2022. Instead, it stayed at half the level of 2008.
In 2022, there were less than a tenth as many repossessions as there had been in the years after the recession.
The amount of money a person can put down on a mortgage is also affected by how much energy costs, how much money they make, and how secure their job is.
And all of these things can change in big ways.
The future of home prices depends on the economy as a whole, which is also hard to predict.
