Live, rolling coverage of business, economics and financial markets as home prices drop by 5.3% from peak last yearGood morning, and welcome to our live coverage of business, economics, and financial markets.UK house prices fell by 5.3% from their peak in August 2022 to this year, the fastest decline since 2009 when the financial crisis caused the housing market to seize up, according to new data from Nationwide.The large monthly fall in house prices in August confirmed that the further leg down in house prices that we have been forecasting has begun to materialise. With mortgage rates likely to remain around current levels for another 12 months, we expect prices to continue to fall until mid-2024, taking the total drop in house prices since their August 2022 peak from 5.3% now to 10.5%.In particular, unemployment is expected to remain low (below 5%) and the vast majority of existing borrowers should be able to weather the impact of higher borrowing costs, given the high proportion on fixed rates, and where affordability testing should ensure that those needing to refinance can afford the higher payments.While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time, especially if mortgage rates moderate once Bank Rate peaks. Continue reading…
Source : theguardian.com
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