Economist: House prices dip, but high mortgage costs persist
Andrew Harvey, chief economist at Nationwide says a decline in house prices does not offset high mortgage costs for buyers looking to get on the property ladder. House prices fell by 0.2% in July, according to Nationwide’s latest House Price Index. Report by Covellm. Like us on Facebook at http://www.facebook.com/itn and follow us on Twitter at http://twitter.com/itn
Transcript
00:00 So what we have been seeing over the last few months
00:02 is a gradual decline in house prices.
00:05 House prices are now 4.5% below their August 2022 peak.
00:09 And I think this really reflects
00:10 the growing affordability pressures we've been seeing
00:13 for those who are looking to buy property at the moment,
00:15 in particular for first-time buyers,
00:17 where we've seen the average mortgage cost
00:19 relative to their take-home pay
00:20 has increased considerably since a year ago.
00:23 It's probably not great news
00:25 if you're looking to buy at the moment,
00:26 because if you are a first-time buyer,
00:29 the size of the house price decline we saw this month
00:32 isn't really enough to offset those rises in mortgage costs.
00:35 So you really be looking to see
00:37 how things develop over the longer term
00:39 in terms of looking to see
00:40 an improving affordability picture.
00:43 But that is gonna take some time, I think,
00:45 to work its way through the system.
00:47 In the meantime, for existing borrowers,
00:49 I think the picture of our activity
00:51 is still one which is relatively subdued at the moment.
00:55 I think what we have been seeing
00:57 is a weaker demand for housing,
01:00 again, a reflection of some of those pressures
01:03 which are coming through.
01:04 So we're likely to see a relatively subdued picture.
01:06 So not necessarily sort of positive news for homebuyers
01:11 at the moment, probably, I would say,
01:12 facing into a relatively difficult marketplace.