The latest report from Nationwide has revealed house prices have fallen 5.3% year on year which is the largest annual decline since 2009. The annual decline for an average home amounts to £146,000. The monthly decline amounted to 0.8%. The average house price according to Nationwide’s House Price Index is £259,153, which is less than the July average of £260,828 and much less than the average last August of £273,751. There are many concerns about this being yet another sign the housing market could be on a long downward trend.

Home buyers finding it hard to get onto the property ladder due to higher interest rates, and higher asking prices, and due to the difficulty in saving for a deposit are turning to the Bank of Mum and Dad and even extended family members to assist. In a recent study by Legal and General (L&G), family members are expected to help in 318,400 property purchases this year. Close to 47% of properties bought by home buyers under the age of 55 will get financial assistance from family members with their purchase.

While homeowners have been warned for awhile now as to the need to prepare for higher interest rates, it has been renewed as the Bank of England’s Monetary Policy Committee (MPC) is due to gather in less than a month to possibly raise the standard base interest rate for the 15th consecutive meeting. Already the rate has caused affordability issues for many homeowners, and there is little relief ahead as there are more rate hikes to come as inflation remains above target. Even a slight increase in the rate could amount to hundreds of pounds more per month for some homeowners.

Homeowners feeling they are standing on thinning ice as the housing market begins to show signs of slowing will not find comfort in the latest forecast by Deutsche Bank. The investment bank expects house prices to decline by 3% to 3.5% by the end of year before the market stabilizes. The fall in demand is not considered a crash of the market, but a correction. 

The news that inflation was on a downward trend is good, especially for homeowners having to endure so many impacts to their household budget. Inflation has long been a source of financial pain to homeowners as energy, fuel, food, services, and products all were taking more money away from their budget. In response to the double-digit inflation growth, the Bank of England’s Monetary Policy Committee (MPC) began in December 2021 increasing the standard base interest rate to combat inflation and bring relief to the economy. It added higher interest rates to the woes of household budget strains.

In another sign that the housing market is shifting, asking prices fell by the sharpest decline since 2018 according to Rightmove. The online property listing website reported that despite the decline, house prices still remain above pre-pandemic levels by 20.0%. The average house price of properties coming onto the market was £364,895.