House prices slump at fastest pace in more than decade as mortgage approvals plummet

HOUSE prices are falling at their fastest rate in more than a decade as the property downturn intensifies.

Average prices dropped by 1.1pc in the year to February, according to lender Nationwide – the first annual drop since June 2020 and the weakest performance since November 2012.

Separate figures pointed to a sharp fall in mortgage lending, suggesting property prices will continue to slide.

Persimmon, one of Britain’s biggest house builders, said sales could fall by as much as 40pc this year. Dean Finch, the chief executive of FTSE 100 builder, said: “We’re still suffering the consequences of Truss’s mini-budget.”

Sales are gradually recovering but “the damage is done”, he said.

House prices fell for the sixth month in a row last month, according to Nationwide, declining by 0.5pc between January and February. Buyer demand has been dampened by doubledigit inflation, higher borrowing costs and the worst cost of living crisis in a generation.

Robert Gardner of Nationwide said: “The recent run of weak house price data began with the financial market turbulence in response to the minibudget at the end of September last year. While financial market conditions normalised some time ago, housing market activity has remained subdued.”

Separate figures from the Bank of England showed mortgage approvals slumped by 46pc in January.

Just 39,600 home loans were offered, the lowest monthly total since the May 2020 housing market shutdown. Excluding lockdown, it was the lowest number of mortgage approvals since January 2009 when the market was reeling from the global financial crisis.

January marked the fifth consecutive drop in approvals.

High interest rates have made it more expensive to borrow and put a break on activity in the property market.