The U.K. housing market took a significant hit in July, with house prices experiencing the most significant decline in 14 years, according to leading mortgage provider Nationwide.
In July, Nationwide's home price index registered a seasonally adjusted change of -0.2%, resulting in a year-over-year decrease of 3.8%.
This decline comes as the Bank of England aggressively raises interest rates to combat inflation, which currently stands at nearly 8% - one of the highest levels among industrialized nations.
Notably, the market's forecast for peak bank rate has risen to as high as 6.5%. Unlike the United States, where mortgage terms can span several decades, the majority of U.K. homes have mortgages ranging from two to five years. As a result, changes in interest rates have a more substantial impact on the British housing market.
According to Nationwide, a prospective buyer earning the average wage and seeking to purchase a typical first-time buyer property with a 20% deposit would face monthly mortgage payments equivalent to 43% of their take-home pay. This figure represents a significant increase from the previous year's 32% and exceeds the long-run average of 29%.
In June, there were 86,000 housing transactions, marking a 15% decline compared to the previous year.
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