Biggest house prices drop in a decade, says Nationwide
House prices have dropped for six straight months, but are they any more affordable?
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Look After My Bills Newsletter Newsletter

House ownership could be becoming more affordable for many buyers across the country after house prices saw their biggest annual fall since 2012.
That’s according to the latest house price index from Nationwide Building Society, which found the latest UK house prices dropped by 0.5% in February.
It follows a 0.6% drop in January and means that house prices have fallen for six straight months.
What’s more, according to Nationwide in the year to February average house prices have fallen by 1.1%.
It’s the first time that the annual rate has recorded a decline since 2020, while the size of that drop is the largest reported by Nationwide since 2012.
Why house prices are falling
So, why have house prices dropped for six consecutive months?
Robert Gardner, chief economist at Nationwide, points out: “The recent run of weak house price data began with the financial market turbulence in response to the mini-Budget at the end of September last year.”
Essentially, the mini-Budget was so poorly received by the financial markets that it has had an enormous impact on the housing market. The expectation that the Bank of England would have to make large increases to the bank base rate led to mortgage lenders across the board pulling their entire mortgage ranges ‒ often with little to no notice ‒ and replacing them with deals which were set at much higher interest rates.
Understandably, given the general uncertainty around at that point, plenty of would-be homebuyers decided to put their plans on hold.
This is borne out by new data from the Bank of England, which found that the number of approvals for mortgages dropped for the fifth straight month in January.
And because of that lack of demand, home sellers have found it harder to find a buyer for their property, which in some cases means accepting a lower price.
In fact, data from Zoopla out this week found that sellers are currently having to accept a 4.5% discount from the asking price ‒ which in cash terms works out at about £14,100 ‒ in order to complete sales currently.
That’s the biggest gap from the asking price that Zoopla has recorded in the last five years, and works out at around a third of the house price gains seen since the start of the pandemic.
Richard Donnell, executive director at Zoopla, said that vendors were showing “greater realism”, recognising the impact of higher borrowing costs on potential buyers.
He continued: “Many homeowners are sitting on sizable house price gains made over recent years and have more room to be flexible, accepting offers below the asking price.”
What next for house prices?
So should we expect further house price falls in the months ahead?
While the mini-Budget reaction led to big increases in interest rates charged on mortgages, they have since dropped down to lower levels.
Despite this, Gardner notes that mortgage rates remain significantly higher than the lows recorded in 2021, while household finances are under ever greater strain due to the persistently high rate of inflation.
He continued: “In addition, deposit requirements remain prohibitively high for many and saving for a deposit remains a struggle given the rising cost of living, especially for those in the private rented sector, where rents have been rising strongly.”
As a result, it seems likely that there will be further house price falls ahead. Myron Jobson, senior personal finance analyst at Interactive Investor, suggests that a “significant psychological shift” is taking place, favouring prospective buyers who have been biding their time in the hope of making the sums add up.
He said: “The recent fall in house prices suggests that we are on the cusp of seeing the sales market handing back purchasing power to buyers.”
That’s in stark contrast to recent years, where the imbalance between housing stock and buyer demand has led to mammoth house price increases.
More on house prices and mortgages
- How are mortgage payments calculated?
- Mortgage borrowing calculator: how to work out what mortgage you can afford
- Help for first-time buyers
- What are the costs of buying a house?
- What is the process of buying a house? From offer to completion
- How much deposit do you need to buy a house?
- House selling costs and process explained
John Fitzsimons has been writing about finance since 2007, and is a former editor of Mortgage Solutions and loveMONEY. Since going freelance in 2016 he has written for publications including The Sunday Times, The Mirror, The Sun, The Daily Mail and Forbes, and is committed to helping readers make more informed decisions about their money.
-
-
Seven ‘awful April’ price hikes – how to beat them and save money
A whole heap of price hikes are coming in this April – we run through the main ones along with ways to beat them and save money
By Sue Hayward • Published
-
State pension underpayment warning - have you been underpaid and eligible for more than £11,500?
Thousands of retirees, mainly women, are still owed money by the government after being underpaid their state pension. We explain what you need to know
By Katie Binns • Last updated
-
Interest rates rise to 4.25% - what does it mean for your money?
The Bank of England has increased the base rate for the 11th time in a row. We look at whether rates could rise further this year, and what the latest hike means for your mortgage and savings
By Ruth Emery • Published
-
New support for struggling mortgage borrowers - but there's a cost
Around 356,000 borrowers may be at risk of missing monthly payments by summer 2024. We explain what help will now be available - and the impact it can have on your credit score
By Stephanie Baxter • Last updated
-
Seven mortgage mistakes to avoid according to experts
Experts reveal the top mistakes you should avoid when looking for the best mortgage deals on the market
By Vaishali Varu • Published
-
First-time buyer mortgage deals March 2023: the best deals this month
We round up the cheapest mortgages for first-time buyers and explain how to get the best deal
By Cathy Hudson • Last updated
-
Fixed mortgages vs variable rate mortgages: which is right for you?
The pros and cons of fixed rate and variable rate mortgages
By John Fitzsimons • Published
-
Base rate rises to 4% - what it means for your money
The Bank of England has increased the base rate from 3.5% to 4%, marking the 10th rise in a row. We explain what this means for your mortgage, savings and loans
By Ruth Emery • Published
-
House prices drop for fifth straight month: 10 places least and most vulnerable to house price crash
As house prices drop for the fifth month in a row, we reveal the 10 areas of the UK most immune to falling property prices
By John Fitzsimons • Published
-
Buying a house: the UK’s most expensive postcodes
Data from GetAgent has broken down the most expensive and cheapest postcodes in which to buy a property
By Nicole García Mérida • Published