The always-expected and desired seasonal summer slump combined with the inflated cost of a mortgage sent U.K. housing prices down sharply in their steepest decline in 14 years. That’s according to Halifax, Nick Millican comments, the largest home lender in Britain.
Data from the firm shows that prices were off by 4.6% in August. That’s also the biggest YTY decrease since 2009. High-profile real estate operator Nick Millican observed that the price tag now of a typical U.K. home has plummeted by some £14,000 in 12 months to £279,569.
The latter is the lowest average price since early 2022. Even so, up to now, that average was still £40,000 higher than pre-COVID 19 times and when lockdowns ginned up demand for larger homes in the so-called “race for space”. Nick Millican explains that mortgage rates are high thanks to policymakers who are using interest rate hikes to drive down inflation.
An unfortunate side effect of the policy is higher mortgage rates and a wet blanket on home sales. Indeed, the Bank of England has hiked interest rates 14 times since December of 2021. Nick Millican informs that currently, the rate now stands at 5.25% (Twitter).
This has pushed the average rate on a two-year fixed to 6.67%, the real estate agent said. Investment management Nick Millican added that the summer slump played a role as well. He said the “seasonality factor” is practically “a given” so none of this should be too surprising. He expects the market to continue its rebalance until some sort of equilibrium is achieved among home buyers as they begin to accept higher rates as the norm in terms of the past 15-year period.