UK house prices have fallen at the fastest rate since July 2009 due to rising interest rates. Nationwide reported that average house prices fell by 3.8% year-on-year in July, marking the largest drop since the financial crisis. This is an increase from the 3.5% drop in June and brings the price of a typical home 4.5% below its peak in August 2022. In July alone, prices dipped by 0.2% to an average of £260,828. Nationwide’s chief economist, Robert Gardner, attributes the decline to the increase in interest rates, making it more challenging for buyers to afford a mortgage. The challenging affordability picture has led to subdued housing market activity, with completed housing transactions in June 15% below 2022 levels and 10% below pre-pandemic levels.
Meanwhile, UK food inflation has dropped to its lowest level this year, with a decrease to 13.4% in July from 14.6% in June. This is the lowest level since December 2022 and has been driven by falling prices of key staples such as oils, fats, fish, and breakfast cereals.
HSBC has reported over doubled pre-tax profits of $21.7bn, benefiting from the acquisition of Silicon Valley Bank UK Limited. However, BP’s profits have dropped due to the decline in oil and gas prices compared to last year.
Looking ahead, economists forecast that house prices will continue to fall, with an estimated 8% decline needed before demand and supply come back into balance. The Bank of England’s expected interest rate rise later this week is likely to further cool the housing market.