The decline in real estate prices in Britain accelerated to its highest rate in 14 years, ie since the global financial crisis that began in late 2008 with the collapse of Lehman Brothers in the United States.
Nationwide Bank, one of Britain’s largest mortgage lenders, said house prices in the UK fell in May at their fastest annual pace in nearly 14 years.
According to reports published by the local press in London, and viewed by Al Arabiya Net, British real estate prices in the year ending in May fell by 3.4%, which is the largest decline since July 2009.
The bank also warned that further increases in mortgage interest rates could hurt the housing market.
Mortgage rates have recently risen on expectations that the Bank of England will have to raise interest rates again due to high inflation.
As a result, Nationwide says, “the housing market headwinds appear set to intensify in the near term.”
Nationwide said that house prices fell by 0.1% during the month of May alone, and the average house price in Britain is now £260,736.
He added that average prices are still 4% lower than their peak in August 2022.
The drop in home prices will generally be welcomed by first-time buyers, who have seen property values continue to rise in recent years, even during the coronavirus pandemic.
However, rising interest rates mean that mortgage costs are now higher than many people looking to enter the housing market had planned.
And new figures from the Bank of England showed that the amount of borrowed mortgage debt was at an all-time low last April, except for the period since the beginning of the Corona pandemic, and in general, borrowers paid 1.4 billion pounds on their mortgages, which is more than what banks lent.
While official figures showed last week that the rate of inflation in Britain – which charts the rise in prices – slowed in April by less than expected, to 8.7%. This has led analysts to expect that the Bank of England will again raise interest rates above their current level of 4.5% to 5.5% in an attempt to slow the rise in prices.
“Interest rates are likely to exert renewed upward pressure on mortgage rates,” said Robert Gardner, chief economist at Nationwide.
He added that the construction community was not expecting a major downturn in the housing market, because “labor market conditions remain strong and household budgets appear to be in relatively good shape.”
The latest figures indicated that the number of real estate sales is declining, and according to government data released last Wednesday, the number of transactions in April reached 82,120, a decrease of 25% from the previous year.