House prices fell by 3.8 per cent in the year to July, according to Nationwide’s latest house price index.
The average house price is now £260,828, down from £262,239 this time last year.
This is the sharpest fall recorded since July 2009, according to Nationwide, and is an increase on the 3.5 per cent annual fall recorded last month.
House prices fell by 3.8% annually in July, according to Nationwide’s latest house price index
July’s change comes after a slight fall of 0.2 per cent over the month, after taking account of seasonal effects.
As a result, the price of a typical home is now 4.5 per cent below the August 2022 peak.
Robert Gardner, Nationwide’s chief economist, believes the continual slide of house prices remains predominantly down to higher mortgage interest rates.
He says: ‘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 per cent deposit, would see monthly mortgage payments account for 43 per cent of their take home pay – assuming a 6 per cent mortgage rate.
‘This is up from 32 per cent a year ago and well above the long-run average of 29 per cent.’
The average house price is now £260,828, down from £262,239 this time last year
Gardner adds: ‘Moreover, deposit requirements continue to present a high hurdle – with a 10 per cent deposit equivalent to 55 per cent of gross annual average income.
‘This challenging affordability picture helps to explain why housing market activity has been subdued in recent months.
‘There were 86,000 completed housing transactions in June, 15 per cent below the levels prevailing the same time last year and around 10 per cent below pre-pandemic levels. Moreover, activity is still around 20 per cent below 2019 levels.’
