UK house prices fell more than expected in November and at the fastest pace since June 2020, as rising borrowing costs weighed on sentiment, according to mortgage provider Nationwide.
House prices fell 1.4 per cent between October and November — the biggest fall since the country was in the depths of a coronavirus-related lockdown more than two years ago — following a 0.9 per cent drop the previous month.
The annual price growth slowed to 4.4 per cent in November, from 7.2 per cent in October.
Both readings were below the 0.3 per cent monthly fall and 5.8 per cent annual increase forecast by economists polled by Reuters.
Robert Gardner, Nationwide’s chief economist, said the decline reflected the fallout from September’s disastrous “mini” Budget on the housing market. “While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum,” he added.
Gardner also said the market has been weighed down by high inflation and the cost of living crisis, which have stretched the finances of potential buyers.
On Tuesday, separate data from the Bank of England showed that mortgage approvals fell to their lowest since June 2020. At the same time, the average rate for new mortgages rose to 3.09 per cent, the highest since 2014.
Gardner said that the outlook was “uncertain”, and much would depend on how the broader economy performs.
Andrew Wishart, senior property economist at Capital Economics, said: “The surge in mortgage rates over the past year will leave the cost of buying a home with a mortgage exceptionally high, making a sharp drop in house prices inevitable.”
He added that a significant fall in mortgage rates and a 12 per cent drop in house prices “will be necessary for the housing market downturn to bottom out”, which he doubts will happen before 2024.