UK house prices are falling at the fastest rate since the financial crisis. According to the latest update from Nationwide building society, property prices fell by 3.8% over the 12 months to the end July as higher mortgage borrowing costs deter some buyers. The cost of the average 2-year fixed mortgage has increased from 2.8% at the end of July 2022 to 6.85% this week, although several lenders have reduced rates slightly in the last few days.
Higher borrowing costs are contributing to a slowdown in house building but are not putting off buyers entirely. Builders merchant Travis Perkins said profits are down 31% as the number of homes under construction has dropped from 52,000 in the second quarter of 2022 to less than 38,000 in the first quarter of this year. Meanwhile, builder Taylor Wimpey reported sales below last year’s level but said there is strong underlying interest as buyers are taking on longer fixed-rate mortgages to deal with higher costs.
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