Property prices in the United Kingdom fell by an average of 1.1 percent year-on-year in February. This is the first year-on-year price drop since June 2020, when the country was in lockdown, and also the largest since November 2012.
Analysts had expected a drop in prices, but only by 0.9 percent. Adjusted for inflation, it is about a price drop of 11 percent, below the level before the corona pandemic.
The average price of a home in the UK is now £ 257,406, according to a study by lender Nationwide. The fall in prices has only been visible since September last year, when British interest rates suddenly began to rise after the budget difficulties under the previous prime minister Liz Truss.
But while conditions in the financial markets have normalized, activity in the real estate market remains weak. This refers to falling consumer confidence and the still high inflation. It is around 10% in the UK, while wages have not risen to the same extent.
In the short term, specialists do not immediately see improvement. Especially if the UK economy will enter a recession this year, as predicted, with more unemployed. Only when inflation calms down a bit, and the British get some financial breathing space again, could the situation improve.
The Bank of England has already published figures on the cooling of the real estate market: the number of transactions dropped to 39,600 in January to the lowest level since May 2020. Persimonn, one of the largest home builders in the UK, warned that sales of new construction could fall by 40 percent this year.
