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House prices fell in all regions of the UK for the first time since 2009 in the three months to September as high mortgage rates hit the housing market, according to Nationwide.
Data on Monday showed average house prices fell 4.7% in the third quarter compared with the same period last year.
Falls were worst in the south-west of England, where prices fell 6.3%, but many areas including Wales and the East Midlands saw falls of more than 5%. London house prices fell 3.8%.
Northern Ireland was the best performing region, but house prices still fell 1.8%, down from a 0.7% rise in the previous quarter.
“This relative downturn is not surprising given that housing affordability has become more challenging,” Nationwide chief economist Robert Gardner said.
He explained that someone with a moderate income purchasing a typical first-time buyer home with a 20% down payment would spend 38% of their take-home pay on their monthly mortgage payment, well above the long-term average of 29%. point.
The Bank of England raised interest rates from a record low of 0.1% in November 2021 to the current 5.25%, causing mortgage payments to increase.
Last week, the Bank of England released data showing mortgage approvals fell to a six-month low in August, while average new mortgage rates rose to their highest level since 2008.
However, markets and most economists now expect the Bank of England to refrain from raising interest rates again after inflation fell more than expected in August.
Gardner said the reassessment of interest rate expectations “puts downward pressure on longer-term rates that underpin fixed-rate mortgage pricing.” “If it continues, this will take some of the pressure off those who are remortgaging or looking to buy a home.”
Graham Cox, founder of Bristol agency SelfEmployedMortgageHub.com, said that with house prices expected to fall further, many buyers were deciding to “hold back and wait for prices to become more competitive”.
He added: “Mortgage rates and house prices are expected to fall by this time next year, with the housing market struggling.”
From a monthly perspective, average UK house prices did not change from August to September. British house prices fell 5.3% in September from the same month last year, the same as in August, the largest decline since July 2009.
That was better than the 0.4% monthly decline and 5.7% annual decline forecast by economists polled by Reuters.
Samuel Tombs, an economist at Pantheon Macroeconomics, said the combination of rising wages and confidence, falling mortgage rates and rising rents making home buying more attractive suggests that “The decline in house prices may only be a few months away.”
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