UK house prices recorded their biggest drop in 14 years, falling 3.8% year-on-year, according to Nationwide's monthly report. Rising mortgage costs put further pressure on the UK housing market, leaving the average house price at £260,828, or €303,885.
The British residential market is facing pressure as banks raise mortgage costs in response to the Bank of England's interest rate hikes, which are already at 5%.
In July, Nationwide data showed that house prices fell 0.2 per cent from the previous month but were 3.8 per cent lower than in the same month last year, continuing June's trend.
"Real estate activity has become more subdued in recent months as mortgage affordability for prospective homebuyers has become a 'challenge'," noted Robert Gardner, Nationwide's chief economist.
The lender estimates that 86,000 sales were made in June, which was down 15 per cent compared to the same period last year and about 10 per cent below pre-pandemic levels.
For Imogen Pattison, economist at Capital Economics, "The fall in house prices in July was the first sign that the mortgage rate rises since mid-May are taking their toll".
Economists and analysts had already forecast that house prices and sales volumes were expected to fall further in the coming months, as they anticipated that mortgage interest rates would remain around their current levels over the next year.
However, property experts were hopeful that a so-called "soft landing" could be achieved.
John Ennis, managing director of Chestertons estate agents, said: "The London property market remained stable in July, despite reporting fewer buyers for the first time, thanks to an increase in cash sales of properties worth over £1 million (€1.16 million)."
For Tom Bill, head of residential research at UK estate agency Knight Frank, "The housing market has not hit the brakes. Demand for housing should be more resilient than expected between now and the 2025 general elections," pointing to the "dampening effect" of wage growth, savings retained since lockdown, negotiation with banks and the popularity of fixed-rate deals.
Article seen in (Financial Times)