UK annual house prices fall most since 2009

The decline in UK house prices accelerated in June, according to Nationwide Building Society, likely fueling concerns about the impact of soaring mortgage rates on borrowers during a cost-of-living crunch, Report informs referring to Bloomberg.

The pace of declines stepped up to 3.5%, the highest since 2009, from 3.4% a month earlier, the lender said in its monthly house price index. That takes the price of an average home to £262,239 ($331,000).

While June’s reading was better than expected, the mortgage market turmoil fueled by the BOE’s moves is likely to mean there is worse to come, according to Nationwide chief economist Robert Gardner.

“The sharp increase in borrowing costs is likely to exert a significant drag on housing market activity in the near term,” he said. “Longer-term borrowing costs have risen to levels similar to those prevailing in the wake of the mini-Budget last year, but this has yet to have the same negative impact on sentiment.”

Still Gardner said that increased stress tests in recent years may mean borrowers are able to cope, without necessarily plunging the economy into a recession.

“Incomes have been rising at a solid pace in recent years,” he said. “Lenders will also work with borrowers to provide assistance wherever possible.”