UK house prices post first annual decline since 2020

LONDON -- House prices in the United Kingdom (UK) fell 1.1 percent year-on-year in February, the first annual decline since June 2020 and the weakest since November 2012, mortgage lender Nationwide Building Society said on Wednesday.

February also saw a 0.5 percent month-on-month fall, the sixth in a row, with prices 3.7 percent lower than the August 2022 peak. Last month's average price stood at 257,406 British pounds ($309,310).

The recent run of weak house price data began with the financial market turbulence in response to the UK's large-scale tax-cutting plan at the end of September last year, Nationwide's chief economist Robert Gardner said.

"While financial market conditions normalized some time ago, housing market activity has remained subdued. This likely reflects the lingering impact on confidence as well as the cumulative impact of the financial pressures that have been weighing on households for some time."

Analysts have expected house prices to fall over the coming months.

"Mortgage rates appear to have hit a floor for now, and households' real disposable incomes will be squeezed again in April by the withdrawal of energy price subsidies by the government," economist Gabriella Dickens at Pantheon Macroeconomics consultancy said.

Expectations among the public that house prices will fall sharply are well-entrenched, suggesting demand will not recover until a significant drop has materialized, Dickens added.