Britain’s Annual House Price Growth Sees ‘Sharp Slowdown’

A man looks at properties for sale in an estate agents window in London on July 10, 2003. Scott Barbour/Getty Images

House prices in Britain are seeing a “sharp slowdown” according to one of the country’s biggest mortgage providers. In their latest report, Nationwide said that growth in annual house prices had shrunk in November to 4.4 percent compared to 7.2 percent in October. The data also showed that house prices have fallen 1.4 percent month on month, the biggest fall since June 2020.

Commenting on the latest set of data, Robert Gardner, Nationwide’s Chief Economist said that “The fallout from the mini-Budget continued to impact the market,” and that “While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum.”

Gardner said even before the increase in rates, the affordability of mortgages was becoming more stretched in the UK, although there was some regional variation. House prices in property hotspots like London are weakening more than in other parts of the country.

Demand Currently ‘Normal’

Andrew McKnight, Managing Director of MAP Estate Agents in Cornwall said that while there is “little doubt” that the housing market has slowed down, this is on the back of some of the busiest times that the market has seen. Knight said after working in the industry for over 30 years in the South West, demand is currently “normal” which shows that whilst there is demand for both buyers and sellers, the “huge demand that existed has eased” but this is expected for the time of year.

Nationwide’s warning came just a few days after property website Zoopla reported that house prices were dropping. According to the company 1 in 10 homes had seen a price reduction of 5 percent or more since September of this year. They also reported that since the mini budget, buyer demand was 44 percent down year on year and that sales had fallen by 28 percent from this time last year.

The news will be seen as a further obstacle to first-time buyers who have constantly battled rising house prices at a time when saving for a deposit can be challenging. With the cost of living rising, the price of renting a home remains high and with no sign of falling, the logic of buying a home can at times appear out of reach.

Outlook Uncertain

Nationwide said that the market looked set to “remain subdued in the coming quarters” as factors such as high inflation as well as an expected rise in interest rates by the Bank of England were likely to cause the economy to slow. However, Gardner said that a “relatively soft landing is still possible” as employment rates in the UK currently remain high as well as a lack of properties coming on the market. Despite a downturn in the number of mortgages, the cost of borrowing has started to fall in recent weeks.

Robert Sinclair from the Association of Mortgage Intermediaries, the representative body for mortgage and protection advice said in an email to The Epoch Times that it’s “a time for reflection, taking advice and considering all options.”

Sinclair said the fall in prices was in the month following the “seismic Kwarteng budget” which led mortgage rates to rise. Going forward Sinclair said, “Expectation is that rates will continue to fall, bringing demand back to the market.”

Richard Donnell, Executive Director at Zoopla said in a statement, “The housing market is adjusting to a reset in the level of mortgage rates but the likelihood of double-digit house price falls at a UK level remains low.”

Despite the outlook of house prices remaining weak, Zoopla said they believe that the ongoing impact of the pandemic, increased flexibility in the labour markets, and more retirements will continue to encourage people to buy and sell homes.