Britain faces biggest house price fall in 14 years …but a rise is on the way

Experts report huge spike in mortgage activity The forecast comes after the heaviest fall in property prices for 14 years as they slumped 3.8 percent in the year to July. Analysts ­rubbished talk of a crash, with many predicting the worst is over. While prices might still dip further, the rate of loss will ease before tumbling inflation and rising consumer confidence fan the flames of a full-on market resurgence in 2024, experts said. James Forrester, of estate agents Barrows and Forrester, said: ‘Just this week, we’ve seen a big spike in mortgage market activity, which suggests an uplift in house prices is just around the corner.’ He added: ‘As interest rates begin to reduce, this growing market momentum will start to snowball and this will reverse the downward house price trends of recent months.’ RESURGENCE: the industry consensus suggests rates may be peaking The average price of a UK home dropped 0.2% to £260,828 last month, according to Nationwide Building Society, a value that is 4.5 percent or £13,000 below the August 2022 high water mark. Mortgage costs have also hit their highest level for 15 years with a typical two-year fixed rate now 6.85 percent. And a five-year deal is at 6.37 percent, according to financial experts Moneyfacts. However, the industry consensus suggests rates may be peaking. Predictions of a full-scale crash are thought to be inaccurate, with industry chiefs saying the market remains buoyant with buyers and sellers hungry for deals. The Nationwide figures are widely regarded as evidence the housing market is ‘thawing’ and that a price resurgence is imminent, with market momentum growing and reversing the downward spiral. Rightmove said the data indicates a return towards activity last witnessed in 2019. IMPROVING: We could soon see a turning point on mortgage rates, says Simon Gammon The average time to find a buyer is now 55 days – quicker than the 62 days witnessed pre-pandemic. Buyer demand is still 3 percent ahead of 2019, and the level of price reductions has returned towards longer-term trends. Nicola Schutrups, boss of broker The Mortgage Hut, said: ‘Further falls in prices are likely for the rest of 2023 but if inflation continues to come down and the jobs market remains strong, there’s still a chance for a soft landing.’ Nathan Emerson, head of property professionals body Propertymark, said: ‘Our member agents report the number of valuations for sale conducted per branch remain steady and a return to normal pace in the market is evident, despite ongoing economic turbulence.’ Nationwide, whose respected analysis of the UK housing market is released in a monthly index, said rising interest rates had cast a shadow. SUBSCRIBE Invalid email We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info Chief economist Robert Gardner said: ‘There has been a slight tempering of expectations in recent weeks but longer-term interest rates, which underpin mortgage pricing, remain elevated. ‘As a result, housing affordability remains stretched for those looking to buy a home with a mortgage. ‘For example, a prospective buyer earning the average wage and looking to buy the typical first-time buyer property with a 20 percent deposit would see monthly mortgage payments account for 43 percent of their take-home pay. ‘This is up from 3 percent a year ago and well above the long-run average of 29 percent.’ Further falls in prices are likely for the rest of 2023 but if inflation continues to come down In June, there were 86,000 completed house deals, down from more than 100,000 last year. Yet experts remain upbeat, predicting that the figures will quickly correct themselves in a full-year bounce-back as the economy fires up once again. Mr Gardner added: ‘While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time.’ Mortgage rates have jumped to their highest levels since 2008, after inflation data suggested the base rate would have to rise further and faster. Tomorrow, the Bank of England is expected to further increase its base rate, currently 5 percent after 13 consecutive rises, by at least 0.25 percent. But some big-name high street lenders have already started to slash fixed-rate mortgage costs after the UK received better-than-expected inflation news. Trending