UK house prices in biggest fall since 2009 as experts warn values to fall 'substantially further'

For sale signs posted outside UK homes
House price warning: The UK housing market could crash by up to 30 per cent
PA
George McMillan

By George McMillan


Published: 31/03/2023

- 12:21

The last time house prices fell as much was towards the end of the global financial crisis in 2009

UK house prices have seen their biggest fall in more than a decade, with industry experts warning the worst is yet to come.

House prices fell by 3.1 per cent in March for the seventh month in a row, the largest annual decline since 2009.


House prices fell by 0.8 per cent month-on-month, bringing the average house price down to £257,122, according to Nationwide Building Society.

Economists had predicted prices would only fall by 0.3 per cent month-on-month, and 2.2 per cent compared to the same time last year.

The roof tops of a housing estate in England

Economists had predicted prices would only fall by 0.3 per cent month-on-month, and 2.2 per cent compared to the same time last year.

PA

Nationwide’s chief economist, Robert Gardner, said: “The housing market reached a turning point last year as a result of the financial market turbulence which followed the mini-budget. Since then, activity has remained subdued.”

He continued: “It will be hard for the market to regain much momentum in the near term since consumer confidence remains weak and household budgets remain under pressure from high inflation.

“Housing affordability also remains stretched, where mortgage rates remain well above the lows prevailing at this point last year.”

The West Midlands was the strongest performing region, with Scotland remaining the weakest.

A row of housesThe number of homeowners in mortgage arrears is expected to rise by 38 per cent by 2024PA

The decline is the biggest seen since 2009, when the UK was nearing the end of the global financial crisis.

Between November 2007 and February 2009, house prices fell consistently for the 16 months, peaking at a decline of 17.6 per cent.

But experts have warned that this month’s drop is only the beginning.

Senior UK economist at Pantheon Macroeconomics, Gabriella Dickens, said “downturn in the housing market now is in full swing”.

A Nationwide Bank signNationwide have hiked their mortgage deals above four per cent.PA

“Demand will not recover until either mortgage rates or house prices have fallen substantially further,” she told The Times.

Earlier this month, an investment fund manager warned house prices could drop as much as 40 per cent.

Temple Bar portfolio manager, Ian Lance, issued the dire warning, explaining there is “no reason” why house prices shouldn’t be at least 30 per cent lower than they currently are.

“House prices looked very, very expensive on a long run basis and I just said that could be one of those things that eventually mean reversed back to its long run average.

“I have no reason to assume that that it won't and again if it does, house prices should be probably 30 to forty per cent lower than they are today (in nominal terms).

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