House prices fall at fastest annual rate since financial crisis
House prices decreased by 0.1% in the month of May alone
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Your support makes all the difference.House prices fell at the fastest annual rate since the financial crisis 14 years ago in May, Nationwide has said.
UK house prices in the year to May were down 3.4% in the biggest fall since July 2009, when a decrease of 6.2% was recorded.
House prices dropped by 0.1% last month alone, with the average property price now standing at £260,736.
But mortgage rates are rising after a smaller-than-expected drop in inflation was announced by the Bank of England last week. and the building society has warned further rises could be on the way.
Nationwide said last week it will increase rates on selected new fixed-rate and tracker mortgages by up to 0.45%.
The current average interest rate on a two-year fixed-rate mortgage is 5.49%, up from 3.25% a year ago, according to financial data firm Moneyfacts.
It comes after Office for National Statistics (ONS) figures released last month showed inflation fell to 8.7% in April, though experts had predicted the drop would be larger at 8.2%.
The figures raise the prospect of a thirteenth interest rate hike by the Bank of England in a bid to slow price rises.
“If maintained, this is likely to exert renewed upward pressure on mortgage rates, which had been trending down after spiking in the wake of the mini-Budget in September last year,” said Robert Gardner, Nationwide’s chief economist.
“Nevertheless, in our view a relatively soft landing remains the most likely outcome since labour market conditions remain solid and household balance sheets appear in relatively good shape.
“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, especially if mortgage rates moderate once Bank Rate peaks.”
Myron Jobson, a senior personal finance analyst at interactive investor, said: “While any fall in prices is good news for house-hunters, it might not be enough to meaningfully offset the rising interest rate and its contribution to monthly mortgage payments.
“The stark reality is owning a home appears to be a distant dream for many, with high mortgage rate rates, high property prices and a higher cost of living, including climbing rents, making buying a home an increasingly difficult prospect.”
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