House prices in the UK fell by 5.3% in August compared to the same month last year, the sharpest fall recorded by the UK property market since July 2009, as reported this Friday by the financial publication Nationwide.
According to the mortgage manager, who attributes this scenario to rising borrowing costs, prices only fell 0.8% in August, the sharpest drop since March, after falling 0.3% in July.
The decline “is not surprising given the magnitude of the escalation in borrowing costs in recent months, which has caused housing market activity to fall well below pre-pandemic levels,” Robert Gardner, chief economist at Nationwide, told the media.
Mortgage lending in recent months has been about 20% below the 2019 average, while applications for new loans indicate demand in the market remains weak, Gardner said.
All in all, “a relatively soft landing is still possible”, according to the economist, if economic activity in the UK stays within current expectations.
“In particular, we expect that unemployment will remain low and that the vast majority of existing borrowers can absorb the impact of rising costs,” he said.
The UK economy grew 0.2% in the second quarter of the year and 0.5% in June, beating market expectations, while the Bank of England kept interest rates at 5.25%, a 15-year high, and there were signs that it is expected to be kept in a high range for an extended period of time. EFECOM