Rising mortgage costs and squeezed affordability have been blamed for the first annual decline in house prices since 2012. The Halifax house price index is 1% below the level this time last year as average prices have fallen steeply since their peak last summer. Mortgage rates have doubled in the last 12 months while high inflation has hit affordability as borrowing rates are rising as lenders expect the Bank of England to hike rates again. The Royal Institution of Chartered Surveyors says the outlook has improved but sentiment remains very low compared to the long-term average.
Construction output in the UK remains positive. However, an increase in commercial and industrial construction is offset by a significant decline in housing. House builder Crest Nicholson reported that profits fell by 60% and completion of new projects fell by 20% in the six months to April, as it warned that rising interest rates will continue to undermine buyers’ confidence and depress demand.
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