House prices fall for the first time since June 2020

The UK’s house prices have recorded their first annual fall since June 2020 after dropping by 1.1% year-on-year in February, Nationwide reports.

It is also the ‘weakest performance’ for prices since November 2012.

Prices between January and February fell by 0.5% – that’s the sixth month in a row – and prices are now 3.7% lower than the peak seen in August 2022.

Nationwide is also highlighting that the housing market won’t ‘regain much momentum’ this year because of economic headwinds.

‘Run of weak house price data’

Robert Gardner, Nationwide’s chief economist, said: “The recent run of weak house price data began with the financial market turbulence in response to the mini-Budget at the end of September last year.

“While financial market conditions normalised some time ago, housing market activity has remained subdued.”

He added: “Conditions should gradually improve if inflation moderates in the coming months as expected, easing pressure on household budgets.

“Solid gains in nominal incomes together with weak or declining house prices will also support housing affordability, especially if mortgage rates edge lower in the coming months.”

‘The first annual house price fall’

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “We’ve had the first annual house price fall since the start of the pandemic boom.

“The question is whether this is the beginning of a gradual and modest deflation, or a bubble that’s set to burst.”

She added: “There’s no doubt we’ll see more falls in the coming months, but overall predictions of drops come in anywhere between 5% and 12%.

“Unfortunately, it’s getting increasingly difficult to remain optimistic.”

‘Values are still higher than pre-pandemic’

Nathan Emerson, the chief executive of Propertymark, said: “Despite house prices falling, values are still higher than pre-pandemic.

“Because of this, our member agents recently reported an 80% increase in new sellers entering the market, showing that despite not pulling in as much money from a sale than they would have done last year, sellers still have a healthy appetite to get moving.”

Tomer Aboody, a director of property lender MT Finance, said: “With consecutive interest rate rises and ongoing increases in the cost of living throughout last year, it is not surprising to see borrowing down in January, as constant bad news inevitably impacted consumer confidence.

“Since January, sentiment has markedly improved, which is likely to be reflected in the next two or three months of data.”

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