Latest data from Nationwide shows reveals house prices fell 0.8% month on month in August 2023 and are now 5.3% below August 2022 peak. This represents an annual fall of circa £14,600 on a typical home.
Robert Gardner, Nationwide’s Chief Economist, said: “While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time, especially if mortgage rates moderate once Bank Rate peaks.” Nationwide added that a relatively soft landing is still achievable, providing broader economic conditions evolve in line with their expectations.
Unemployment is expected to remain low (below 5%) and the vast majority of existing borrowers should be able to weather the impact of higher borrowing costs, given the high proportion on fixed rates, and where affordability testing should ensure that those needing to refinance can afford the higher payments. Meanwhile an examination of the composition of transactions reveals that cash purchases, though down from the 2021 highs, have been remarkably resilient.
