UK house prices have experienced their steepest annual decline in 14 years, with a 3.8% drop in July 2023, according to the building society, Nationwide. This takes the total fall to 4.5% since the peak last august.
While the drop in house prices could be good news for first-time buyers, higher mortgage rates have stretched housing affordability. Mortgage costs reached a 15-year high in July, influenced by inflation and uncertainty surrounding the Bank of England‘s rates.
According to the BBC, a first-time buyer on an average wage, with a 20% deposit, could expect mortgage payments to account for 43% of their take-home pay (based on a 6% mortgage rate). This is a significant increase compared to last year, when new homeowners spent just over a third of their income on mortgage payments.
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