UK House Prices Fall as Mortgage Rate Uncertainty Hits Homebuyers

The UK housing market has taken a hit as mortgage rate uncertainty and cost of living pressures continue to weigh on homebuyers. According to Nationwide, UK house prices fell by 0.4% in April, marking the second consecutive month of decline.

The average UK house price now stands at £261,962, down from its peak in the summer of 2022. The decline is largely attributed to buyers delaying their purchase plans due to affordability fears and higher interest rates.

UK house prices have fallen for the second month in a row

Changing Expectations Around Interest Rate Cuts

The cost of fixed-rate mortgage deals has risen, making it clearer that an interest rate cut is further away than initially thought. According to Moneyfacts, the average two-year fixed residential mortgage rate is moving back towards the 6% mark, last seen in December.

“House prices are now around 4% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.” - Robert Gardner, Nationwide’s chief economist

Prospective Buyers Delaying Plans

Research by Censuswide for Nationwide found that nearly half (49%) of prospective first-time buyers have delayed their plans over the past year due to cost of living pressures and higher interest rates. A staggering 84% of respondents said that the cost of living has affected their plans to buy, with many having to save for a deposit.

First-time buyers are struggling to save for a deposit

Compromising on Property Choices

Buying a property in a less expensive area appears to be the most common compromise that prospective buyers will make. Around a third (32%) said they would consider a smaller property than they wanted, while 28% would opt for a property that needed work doing.

Buyers are having to compromise on their property choices

The UK housing market is facing uncertain times, and it remains to be seen how the situation will unfold in the coming months.