Property prices plummet at fastest rate in 12 years

Property prices plummeted at their fastest rate in 12 years last month­ with values set to fall even further, experts have warned.

Britain’s biggest mortgage lender said £8,000 had been wiped off the average three-bed semi as prices fell 2.6 percent. The average cost of a home is now £285,932, the largest yearly fall since June 2011, says Halifax.

Industry chiefs warn a housing crash could force owners to sell up if soaring interest rates mean they ­cannot afford to remortgage when cheap fixed-rate deals end.

Karen Noye, mortgage expert at Quilter, said: “The economic storm currently battering Britain seems like an insurmountable hurdle and downward pressure on house prices is inevitable.

“With two-year fixed rate mortgages now well above 6 percent, people’s ability to continue to service their mortgage will be called into question.

READ MORE New-build village ‘falling apart’ and residents ‘aren’t allowed to do anything

“This could create an environment where those who have overstretched themselves look to offload their properties at a time where there is a dearth of demand,” she added.

Signs of the increasingly faltering market were highlighted by the latest HM Revenue and Customs figures, which showed home sales fell by a quarter year on year in May. There were 80,020 completed transactions in May – a 3 percent drop on April.

It comes in the wake of the Bank ­of England’s 13th consecutive rise in the base rate as it battles stubbornly high inflation.

Myron Jobson, personal finance analyst at Interactive Investor, said: “The spring/summer season is usually the busiest period for the housing market, but this year there isn’t the usual momentum as the once in a ­generation type affordability squeeze has forced many would-be buyers to shelve their plans.

“House prices, while falling, remain at levels many can’t afford while the recent increase in mortgage rates has pummelled buyers, and inflation is chipping away at the real value of deposits.

Don’t miss… Dilapidated cottages for sale with incredible £0 auction price[LATEST]

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

“Sellers may be forced to reconsider what they deem as fair value amid current market conditions. This may ultimately lead to price reductions or stagnant home values.” BofE rate setters hiked the base interest rate to 5 percent earlier this month, its highest in 15 years. There are predictions it could soar to 6.5 percent by March 2024.

Kim Kinnaird, director at Halifax Mortgages, said the squeeze “will inevitably act as a brake on demand in the UK housing market”.

House prices in the West Midlands, Yorkshire and Humberside stagnated or rose marginally, while all other regions fell.

The South registered the steepest annual fall at 3 percent, the lender’s property price index showed.

London recorded an annual decline of 2.6 percent, its weakest since October 2009 and a drop of £15,000 in a year.

Source: Read Full Article