UK House Prices Feel the Pinch of Rising Mortgage Costs

The UK housing market has taken a hit, with prices falling at their sharpest pace in eight months. This decline is largely attributed to the rising cost of mortgages, which has put a strain on consumers ahead of the general election this year.

According to figures from the Nationwide Building Society, house prices fell by 0.4% in April, following a 0.2% decline the previous month. This is a stark contrast to the expected 0.1% monthly increase predicted by economists. The average cost of a home now stands at £261,962, a 4% drop from its peak in the summer of 2022.

House prices have stagnated over the past year, with a mere 0.6% increase.

“Though mortgage affordability is much better than it was last summer, it remains very stretched relative to historical norms,” said Peter Arnold, chief economist at EY UK. “A strong recovery is unlikely.”

The slowdown in the housing market is likely due to ongoing affordability pressures, with longer-term interest rates rising in recent months. This has reversed the steep fall seen around the turn of the year, according to Robert Gardner, chief economist at Nationwide.

Mortgage rates have risen, making it harder for people to afford homes.

Research conducted by Nationwide and Censuswide found that almost half of prospective first-time buyers looking to secure a home in the next five years have delayed their plans. The most commonly cited reason for delaying their purchase is that house prices are too high (53%), but it’s also notable that 41% said that higher mortgage costs were preventing them from buying.

Many first-time buyers are delaying their purchases due to high house prices and mortgage costs.

Another 55% of people said they’d be willing to buy in a cheaper area of the country or where they could get a bigger property - with half willing to move more than 50 kilometers away.

Some buyers are willing to move to a cheaper area or consider a bigger property.

The UK housing market is facing a challenging time, with rising mortgage costs and stagnant house prices. As the general election approaches, it remains to be seen how the government will address these issues and support the housing market.

The UK housing market is facing a challenging time, with rising mortgage costs and stagnant house prices.