It comes as property prices were down 5.3 per cent in September when compared to the same time last year, a fall of £14,500, according to the latest house price index from Nationwide.
Robert Gardner, Nationwide’s chief economist, said: “This relatively subdued picture is not surprising given the more challenging picture for housing affordability.”Gardner said that someone earning an average income and purchasing a typical first-time buyer home with a 20 per cent deposit would spend 38 per cent of their take-home pay on their monthly mortgage payment. This is well above the long-run average of 29 per cent.
Some buyers, in response to worsening affordability of properties, were looking at smaller, cheaper homes, Nationwide said. “It looks likely that it will be a slow market for the remainder of this year and I expect much will then depend on the outlook for rates. If it becomes clearer that the base rate has hit or is about to hit the peak in coming months, it could help to encourage more buyers to return sooner in the new year than it might have looked likely only a couple of months ago.”
Tom Bill, head of UK residential research at Knight Frank, added: “The number of people rolling off more favourable fixed-rate mortgages won’t fall in 2024, but sentiment should improve as volatility reduces. We think most of the UK’s house price correction will happen this year and modest single-digit annual growth will return after the next general election.”
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