In pictures: UK housing crisis to get worse as rate rises bite

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In pictures: UK housing crisis to get worse as rate rises bite

London prices fell the most in cash terms - down 22,777 pounds from a year ago

Published: September 07, 2023 13:58 Compiled by Nivetha Dayanand, Web Editor, with inputs from Bloomberg

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Copy of 401703967-1694080603408 — Britain's residential property market slump deepened, with figures from two of the top mortgage lenders indicating home prices falling at the fastest pace since 2009 and warnings of worse to come. Image Credit: Bloomberg

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Copy of 401680841-1694080611824 — Halifax said Thursday the average value of a home fell 1.9% in August alone to 279,569 pounds ($349,570), the sharpest monthly pace since November. It left prices 4.6% lower than a year ago when the value of UK property peaked. Image Credit: Bloomberg

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Copy of 401751339-1694080592168 — The findings echo those of rival lender Nationwide Building Society last week, and together those reports suggest the UK property market is about half way through a 10% drop economists forecast. Bank of England Governor Andrew Bailey last night warned that much of the impact of a surge in interest rates has yet to hit the economy. Image Credit: Bloomberg

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Copy of 401680711-1694080620645 — "We do expect further downward pressure on property prices through to the end of this year and into next," Kim Kinnaird, director at Halifax Mortgages, said in a statement Thursday. "There is always a lag-effect where rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs flowing through." Image Credit: Bloomberg

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Copy of 401751308-1694080589384 — The Bank of England has raised interest rates 14 times since late 2021 tame inflation, and that's straining the finances of consumers already hit with higher food and energy bills. Image Credit: Bloomberg

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Copy of 401680935-1694080618146 — The slump in the housing market highlights a risk to Prime Minister Rishi Sunak's government as it prepares for an election widely expected next year. Falling prices are unsettling property owners, who have grown accustom to steady increases over the past decade. Economists say the downturn is likely to intensify in the second half of this year. Image Credit: Bloomberg

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Copy of 401751161-1694080586229 — Bailey last night signaled that the quickest tightening in rates in three decades may be near an end, noting that the economy is starting to show strains from hikes that started in 2021. "We've definitely got a substantial amount of transmission to come," Bailey told lawmakers Wednesday in London. Image Credit: Bloomberg

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Copy of 401680827-1694080608972 — The latest decline interrupts a sharp surge in property prices that followed the pandemic, when buyers bid up the cost of bigger homes with outdoor space and room for an office. Kinnaird noted that even after the decline, the average price remains about 40,000 pounds, or about 17% higher than they were before the first lockdown. Image Credit: Bloomberg

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Copy of 401680845-1694080615554 — The correction so far is well short of the slump in the early 1990s, when prices fell for years in a row leaving millions of people living in houses well below the value they borrowed to move in. Image Credit: Bloomberg

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Copy of 401704127-1694080600649 — The biggest drops were recorded in the South East of England, where prices fell 5% from a year ago. Nationwide, affordability levels now match June 2020 levels, though some of that will be offset by the higher cost of loans. London prices fell the most in cash terms "- down 22,777 pounds from a year ago "- and fell at an annual pace of 4.1%. Image Credit: Bloomberg

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