House prices fell for the fifth month in a row in the longest string of declines since the global financial crisis more than a decade ago.
The average sale price fell to £258,297 in January, down from £262,068 in December, a fall of 0.6pc, according to Nationwide.
The fall means the average home is worth 3.2pc less than its August peak. Annual price growth slowed to 1.1pc in January.
Nationwide’s chief economist Robert Gardner said:
There are some encouraging signs that mortgage rates are normalising, but it is too early to tell whether activity in the housing market has started to recover.
The fall in house purchase approvals in December reported by the Bank of England largely reflects the sharp decline in mortgage applications following the mini-Budget.
It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks.
As we highlighted in our recent affordability report, the biggest change in terms of housing affordability for potential buyers over the last year has been the rise in the cost of servicing the typical mortgage as a result of the increase in mortgage rates.
Should recent reductions in mortgage rates continue, this should help improve the affordability position for potential buyers, albeit modestly, as will solid rates of income growth (wage growth is currently running at around 7pc in the private sector), especially if combined with weak or negative house price growth.
Nevertheless, the overall affordability situation looks set to remain challenging in the near term.
