House prices dropped more than was expected this month, falling 5.3 per cent compared to August last year. The value of the average home in Britain has, on average, fallen by £14,600. This marks the biggest annual decline on record since the financial (and housing) crash of 2008/9. So, is a housing crash imminent? Could we be seeing one right now?
There are a few reasons to be cautious about the data. Nationwide’s metrics are based on mortgage approvals (cash purchases are not included), which have dropped significantly – by about 20 per cent this year, compared to 2019. Higher interest rates have meant that fewer people want to sell right now, and fewer people are in a position to buy. This leaves more room for the numbers to be skewed: there simply isn’t as much data as would normally be available to make grand conclusions about the trajectory of the housing market.
Of course, fewer mortgage approvals are a sign that the housing market is weak – or certainly weaker than it has been the past few years.
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