House prices fall across all UK regions for first time since 2009

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House prices fell across all UK regions for the first time since 2009 in the three months to September as high mortgage rates hit the property market, according to Nationwide.

The average house price was 4.7 per cent lower in the third quarter than in the same period last year, data showed on Monday.

The decline was sharpest in the south-west of England, where prices fell 6.3 per cent, but many regions, including Wales and the East Midlands, recorded contractions of more than 5 per cent. House prices in London dropped 3.8 per cent.

Northern Ireland was the best-performing region, but house prices still declined 1.8 per cent, down from a 0.7 per cent expansion in the previous quarter.

Robert Gardner, Nationwide’s chief economist, said: “This relatively subdued picture is not surprising given the more challenging picture for housing affordability.”

He explained that someone earning an average income and purchasing the typical first-time buyer home with a 20 per cent deposit would spend 38 per cent of their take-home pay on their monthly mortgage payment — well above the long-run average of 29 per cent.

The rise in mortgage payments follows the Bank of England’s increase in interest rates from a record low of 0.1 per cent in November 2021 to the current 5.25 per cent.

Last week, data published by the BoE showed that mortgage approvals fell to a six-month low in August, while the average new mortgage rate rose to the highest level since 2008.

However, markets and most economists now expect that the BoE will not raise interest rates again after inflation fell more than expected in August.

The reassessment of interest rate expectations “has put downward pressure on longer term interest rates which underpin fixed rate mortgage pricing”, said Gardner. “If sustained, this will ease some of the pressure on those remortgaging or looking to buy a home.”

Graham Cox, founder of the Bristol-based broker SelfEmployedMortgageHub.com, said that because house prices were expected to fall further many buyers had decided to “put things on hold and wait for house prices to become even more competitive”.

“With both mortgage rates and house prices expected to be lower this time next year, the property market is in limbo,” he added.

On a monthly basis, the average UK house price was unchanged between August and September. UK house prices in September were 5.3 per cent below the same month last year, unchanged from August and the sharpest fall since July 2009.

This was better than the monthly decline of 0.4 per cent and the annual 5.7 per cent fall forecast by economists polled by Reuters.

Samuel Tombs, economist at Pantheon Macroeconomics, said the combination of rising wages and confidence, declining mortgage rates and high rental prices that make purchasing a property more attractive suggested that “the downturn in house prices probably has only a few months left to run”.