The latest house price index reveals July 2023 was the “weakest outturn” since July 2009

Annual house prices continued to drop in July according to the latest Nationwide House Price Index.

House prices fell 0.2% month on month in July, pushing the annual rate of house price growth further into negative to -3.8%, down from -3.5% in June. 

The price of a typical home is now 4.5% below the August 2022 peak and buying activity is around 20% lower than it was in 2019. 

“This was the weakest outturn since July 2009, although it is only modestly lower than the -3.5% recorded last month,” said Robert Gardner, Nationwide’s chief economist.

He commented that the volatility of interest rates and rising bank rates had kept mortgage rates elevated.

Gardner added: “This challenging affordability picture helps to explain why housing market activity has been subdued in recent months. 

“There were 86,000 completed housing transactions in June, 15% below the levels prevailing the same time last year and around 10% below pre-pandemic levels.  

Screenshot 2023-08-01 at 09.42.51

“More timely mortgage approval data showed a slight increase in activity in June, though most of these applications will pre-date the more recent rise in longer-term interest rates.”

Responding to the Nationwide HPI, Tom Bill, head of UK residential research at Knight Frank, said he expects prices to fall 5% this year.

“Higher borrowing costs have knocked sentiment and forced buyers to recalculate their budgets but the property market hasn’t slammed on the brakes,” he said. 

“The bank rate is nearing its peak, which means that while sentiment will remain subdued, it will only improve in the second half of this year. 

>>See also Buyer demand drops 18% in two months - Zoopla

>> See also House sales ‘to drop 25%’ amid mortgage rate surge

“That said, prices and sales volumes will come under pressure as the market descends from the highs of the pandemic and adjusts to the new lending environment.”

John Ennis, CEO of Chestertons, said the property market in London “remained stable” throughout July.

“Whilst there were fewer first-time buyers with support from the Bank of Mum and Dad, we witnessed an increase in cash buyers and higher-valued property sales over £1m,” Ennis said.

“Some buyers who are currently registering are optimistic that we will be seeing more favourable interest rates at some point. Their desire to continue the house hunt has therefore remained strong with many hoping to find a property by the autumn.”

Property portals Zoopla and Rightmove recently reported annual house price growth of around half a percent year on year.