House prices in the UK continued to fall in January, sliding for the fifth month in a row, pushing the average cost of a home 3.2% below the peak seen last August.
The cost of a home dropped by 0.6% in the first month of the year compared with December 2022, according to the Nationwide building society’s monthly survey. Annual house price growth also slowed at the start of the year to 1.1%, down from 2.8% in December. This is the lowest growth since June 2020, when the housing market reopened after being frozen during the early months of the Covid pandemic.
The average price of a home slid to £258,297 in January, a fall of almost £4,000 from a month earlier, when the average property price was £262,068. However, it was too early to tell whether housing market activity had started to recover, as mortgage rates offered by lenders are returning to normal after they soared following Liz Truss and Kwasi Kwarteng’s disastrous mini-budget.
Demand for mortgages also tumbled to its lowest level since the 2020 Covid lockdown in December, according to figures from the Bank of England, which found the number of home loan approvals continued to drop in December.
Robert Gardiner, Nationwide’s chief economist, said the gloomy economic outlook was likely to continue to have an impact on the housing market and prospective buyers. Nationwide found that prospective house buyers were facing a bigger challenge to afford property, as a result of the increase in mortgage rates.