House price growth at weakest since 2009

House prices are now 5.3% below their peak in August last year, according to Nationwide’s House Price Index, representing an annual fall in value of around £14,600 on a typical property. The average UK property price now stands at £259,153, a fall of 0.8% over the month.

Robert Gardner, Nationwide’s chief economist said: “The softening is not surprising, given the extent of the rise in borrowing costs in recent months, which has resulted in activity in the housing market running well below pre-pandemic levels. For example, mortgage approvals have been around 20% below the 2019 average in recent months and mortgage application data suggests the weakness has been maintained more recently.

“Nevertheless, a relatively soft landing is still achievable, providing broader economic conditions evolve in line with our (and most other forecasters’) expectations.”

While transactions are lower than pre-pandemic levels across all types of property, according to the building society, the biggest decline has been in detached houses, indicating that buyers are looking towards smaller, less expensive properties.

Separate data from property website Zoopla suggested that UK prices have risen 0.1% in the last year, although this is still the slowest rate of growth seen since 2012. There are big regional differences, Zoopla said, with annual price growth up 1.7% in Scotland, but at -1% in London.

Despite house prices falling in many areas, affordability remains one of the biggest barriers to those looking to buy. You need a household income of more than £75,000 a year to buy in parts of southern England, Zoopla said, and mortgage rates that are 23% higher than last year, have added an extra £216 per month to the average mortgage repayment.

According to Zoopla, property sales should recover over the next couple of years, with growing numbers looking to move home due to a combination of more flexible working, an ageing population - many of whom might be looking to downsize, a strong labour market and high immigration. The site predicts that the UK house price to earnings ratio will be 6.3x by the end of this year, making buying a house as affordable as the average over the last 20 years.