House prices in the UK have dropped for the first time in over a year following Liz Truss and Kwasi Kwarteng’s mini budget back in October. According to figures from Nationwide, UK house prices have fallen by 0.9%.
This will mark the first time the housing market in the UK has experienced a drop since the Covid-19 pandemic. As a knock-on effect, it has also seen a sharp rise in mortgage rates.
Currently, the average price of a house in the UK is £268,282, according to Nationwide. The average price of a house in the UK in September was £272,259.
Despite this, mortgage rates are expected to rise even further as the government looks to tackle the country’s inflation crisis. As of right now, inflation in the UK stands at 10.1%
According to Zoopla, mortgage rates of 4-5% are set to become “the norm”. However, they also predict that mortgage rates will begin falling again before the start of 2023.
Robert Gardner, chief economist at Nationwide, said: “October saw a sharp slowdown in annual house price growth, to 7.2% from 9.5% in September. Prices fell by 0.9% month-on-month, after taking account of seasonal effects, the first such fall since July 2021 and the largest since June 2020.
“The market has undoubtedly been impacted by the turmoil after the mini-budget, which led to a sharp rise in market interest rates. Higher borrowing costs have added to stretched housing affordability at a time when household finances are already under pressure from high inflation.”