Biggest house price fall since 2020

HOUSE prices have suffered their biggest fall since the height of the pandemic after the mini-Budget caused steep interest rate rises.

Prices fell by 0.9 per cent last month according to the latest figures from Nationwide Building Society.

This followed the former chancellor Kwasi Kwarteng’s tax-cutting splurge on September 23 that prompted lenders to withdraw hundreds of deals and replace them with more expensive offers.

Robert Gardner, Nationwide’s chief economist, said: ‘ The market has undoubtedly been impacted by the turmoil following the mini-Budget, which led to a sharp rise in market interest rates.’ With households also facing a cost of living squeeze, the market looks set to slow further over the coming months, Mr Gardner added.

The month- on- month house price decline in October was the first such fall since July 2021 and the largest since June 2020.

It left the average house price at £268,282 last month. That was 7.2 per cent up on the same month a year ago, a sharp slowdown compared to annual house price growth of 9.5 per cent recorded in September. For most of this year, annual price growth has been in double figures and hit 14.3 per cent in March.

The outlook looks ‘extremely uncertain’, Mr Gardner said.

Inflation is at a four-decade high, driven by surging energy and food prices, and the Bank of England has been rapidly hiking interest rates. It is expected to announce a further increase tomorrow.

Based on average mortgage rates climbing to 5.5 per cent, a first-time buyer on a typical wage with a 20 per cent deposit would have to shell out 45 per cent of their pay to meet the monthly repayments.