Daily Mail

Biggest house price fall in a decade

- By Adele Cooke Money Mail reporter

HOUSE prices have fallen at the sharpest rate in a decade – with £16,000 wiped off the typical home in just six months, figures show.

Property values dropped 1.1 per cent in the year to February, the biggest dip since November 2012, Nationwide Building Society said.

It is the first time annual property prices have declined since June 2020, during the Covid pandemic, when they fell by 0.1 per cent.

A typical home is now worth £257,406 after values plummeted for the sixth consecutiv­e month.

Properties are currently worth 3.7 per cent less than their peak in August, when the average home was valued at £273,751 – or some £16,345 higher than last month.

The fallout from September’s mini-Budget and the subsequent rise in borrowing costs is largely to blame for declining house prices, Nationwide suggested.

Mortgage rates peaked in October, when the average five-year fixed-rate deal reached a 14-year high of 6.51 per cent, according to analyst Moneyfacts. Although rates have subsequent­ly fallen, they still remain much higher than during the pandemic.

The average five-year fix is currently 5 per cent, up from 2.25 per cent in July 2020.

Jeremy Leaf, a north London estate agent and a former RICS residentia­l chairman, said: ‘These figures reiterate worries about interest rates and inflation. However, we are seeing more listings and protracted sales so buyers have more choice and are negotiatin­g harder when making offers.’

Meanwhile, the number of mortgage approvals fell for the fifth month and is now as low as in 2009, excluding the first few months of the pandemic in 2020.

Just 39,600 applicatio­ns were approved in January, 34,800 fewer than in August, according to the Bank of England.

Homeowners borrowed £2.5billion from mortgage lenders in January, down from £3.1billion in December.

Rising mortgage costs are to blame for the decline in approvals, buying agent Henry Pryor says.

He said: ‘Credit has become more expensive, affecting affordabil­ity and reducing the number of mortgages accepted. This will continue throughout the year as the market adjusts to the higher cost of borrowing.’

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