House prices tumble at fastest rate since start of pandemic

HOUSE prices are falling at the fastest rate since the start of the pandemic, as a property market downturn accelerates amid higher mortgage costs.

Property values fell by almost £4,500 in November, according to lender Nationwide, marking the third consecutive month of declines.

Prices dropped 1.4pc compared with October, which was the biggest monthly drop since June 2020 when the market was reeling from lockdowns. The average British home now costs £263,788 – £4,494 less than in October. House price growth remained positive on an annual basis but slowed sharply, dropping from 7.2pc to 4.4pc. The market has slowed dramatically after a surge in mortgage rates. Fears of a recession and predictions of deeper price falls to come next year are also acting as a drag anchor.

Robert Gardner, of Nationwide, said the fallout from the mini-budget at the end of September was still being felt in the form of higher interest rates. Mr Gardner said: “While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum. Housing affordability for potential buyers and home movers has become much more stretched at a time when household finances are already under pressure from high inflation.”

Affordability was already at a record low prior to the economic turmoil of the past two months. Mr Gardner forecast that the property market would remain subdued well into next year, in line with the predictions of most other analysts.

Widespread expectations for doubledigit house price falls next year threaten to plunge tens of thousands of stretched homeowners into negative equity.

Almost 90,000 first-time buyers who bought in 2020 and 2021 could effectively be barred from remortgaging as a result, according to analysis Capital Economics.