UK Real estate market 2023: Slow down continues for 5th month

Key takeaways: 

• UK real estate prices dropped for the fifth month in a row in January, according to the Nationwide Building Society.

Last month’s average UK real estate cost was £258,297, which fell by 0.6% in December.

UK real estate price falls again: 

The annual house price increase was delayed to 1.1%, down from 2.8% in December.

The nation’s largest building society said it would be “hard for the market to retrieve momentum in the near term.”

Robert Gardner, the chief economist at Nationwide, stated, “economic headwinds are set to stay strong” as increasing costs continue eating into household budgets.

He continued that the affordability of mortgages would “remain difficult” in the short term due to higher interest rates while keeping for a deposit was “proving a work for many given the increasing cost of living”.

Mortgage approvals slip

On Tuesday, the Bank of England said lenders had agreed to fewer mortgages than anticipated in December, nearly 35,000 compared with almost 46,000 in November.

That is the lowest digit since January 2009, except for the pandemic lockdowns.

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Nationwide said the fall in approvals followed a significant deceleration in mortgage applications following the country’s mini-budget in September.

Yet, it said there were signs that mortgage rates were gradually improving.

“Longer-term interest rates have begun to edge down, and should we notice that continue, that should provide into lower mortgage costs and provide some easing in the affordability forces,” its senior economist Andrew Harvey apprised BBC Radio 4’s Today programme.

Increasing rates

Mortgage rates increased last year as the Bank of England raised interest rates to combat the high cost of living.

But they spiked further by 6% – their highest level for 14 years – after Liz Truss’s mini-budget sparked terror in economic markets.

Since then, markets have settled, and mortgage rates have somewhat slipped, but they stay much higher than a year back.