UK Nationwide house prices fell by 0.5% in February, slightly worse than analysts’ expectations for a drop of 0.4%. Year-on-year house prices dropped by 1.1%, swinging into negative territory versus an increase of 1.1% in January and below forecasts for a decline of 0.9%.
British house prices fell year-on-year for the first time since June 2020, with the biggest annual drop since November 2012. The housing market is struggling under the weight of lacklustre economic growth, a softening consumer, falling real wages, and rising mortgage rates as the Bank of England continues to raise interest rates. Potential homeowners appear to be holding off in anticipation that mortgage rates and house prices will cool later this year. Stemming an even steeper slide is the chronic shortage of housing supply in the UK.
According to Zoopla, UK home sellers have been forced to cut £14,000 on average from asking prices, with 40% of sellers having to lower their prices online in order to attract buyers. However, looking longer term, data from Halifax indicates that over three years from January 2020 to December 2022, house prices have risen by just over 20%, with particular strength for larger properties outside of busy urban areas amid the post-pandemic hunt for more space. Meanwhile, urban areas have struggled with flats in London climbing the least.