London
Higher borrowing costs are constraining activity in the property market. House prices across Britain are, on average, 5.3% lower than they were a year ago – the sharpest drop since July 2009, according to the Nationwide house price index. The decline accelerated from the 3.8% year-on-year fall recorded last month and August marks the seventh monthly decline in prices in a row. A typical house now costs £259,153, down from £273,751 a year earlier. Mortgage approvals have fallen by around a fifth compared with 2019. “Nevertheless, a relatively soft landing is still achievable,” providing unemployment stays below 5% and “the vast majority” of borrowers continue to be able to weather the effects of rising interest rates, says Robert Gardner (pictured), Nationwide’s chief economist. Rising wages and “modestly lower” house prices “should help to improve housing affordability over time”. Until then, a typical first-time buyer earning average pay, with a 20% deposit and a mortgage rate of 6%, will be spending 40% of their take-home salary on mortgage repayments. The long-term average is 29%. Property
