UK house prices fall at fastest rate for nearly 14 years
First-time buyers may welcome the news but higher than expected inflation means mortgage costs remain an issue

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House prices in the UK have had their biggest annual fall in nearly 14 years, according to Nationwide, one of the country’s biggest mortgage lenders.
The 3.4% year-on-year drop in May is the biggest since July 2009, “when an annual fall of 6.2% was recorded”, reported Sky News.
A reduction in house prices “would generally be welcomed by first-time buyers, who have watched property values continue to climb in recent years, even during the pandemic”, said the BBC.
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But rising interest rates mean that “mortgage costs are now higher than many people looking to get on the housing ladder might have planned for”, added the broadcaster.
Many lenders, including Nationwide, “have already pulled fixed-rate mortgage offers and replaced them with higher-cost loans in response to the financial market moves following disappointing inflation figures for April”, reported the Financial Times (FT).
Responding to the figures, Chris Druce, senior research analyst at estate agent Knight Frank, indicated that “potential purchasers should expect some volatility around a reasonably stable trend in prices”.
Druce told the FT: “There is still an element of price exploration playing out in the residential property market, as buyers and sellers adapt to the reduction in spending power that has occurred due to the significant increase in borrowing costs over the last 18 months.”
The drop in house prices is not a surprise, “given the rise in interest rates over the past year”, said Ross Clark in The Spectator.
“Two months ago Nationwide was expecting the Bank of England base rate to peak at 4.5% this autumn and then to be reduced, reaching 4% by the end of 2024”, he added. But due to recent inflation data, “it now expects rates to peak at 5.5% and to remain over 5% until the end of next year.
“That is not good news for the housing market,” said Clark.
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Jamie Timson is the UK news editor, curating The Week UK's daily morning newsletter and setting the agenda for the day's news output. He was first a member of the team from 2015 to 2019, progressing from intern to senior staff writer, and then rejoined in September 2022. As a founding panellist on “The Week Unwrapped” podcast, he has discussed politics, foreign affairs and conspiracy theories, sometimes separately, sometimes all at once. In between working at The Week, Jamie was a senior press officer at the Department for Transport, with a penchant for crisis communications, working on Brexit, the response to Covid-19 and HS2, among others.
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