UK House Prices See Largest Decline Since Financial Crisis

UK house prices are falling at the fastest pace since the global financial crisis due to the impact of historically high interest rates, according to an analysis.

On the 10th (local time), the Royal Institution of Chartered Surveyors (RICS) reported that the UK house price index for July stood at -44%. This means that 44% more surveyors reported a decline in house prices than those reporting an increase. This is the largest drop since 2009, immediately after the global financial crisis.

Simon Rubinsohn, chief economist at RICS, stated in the report, "Rising economic uncertainty, interest rate hikes, and tightening credit conditions are weighing heavily on the market," adding, "The recent increase in mortgage demand is expected to reverse within the next few months."

During the same period, inquiries for new home purchases also fell by 45% compared to the same month last year, continuing the decline seen in the previous month (-46%). RICS explained that the decrease in new home purchase inquiries was evenly spread across the UK.

[Image source=AP Yonhap News]

Bloomberg News analyzed this as evidence that the UK housing market is entering a slump due to rising mortgage costs caused by aggressive tightening.

The UK has raised its base interest rate 14 consecutive times to curb inflation, reaching the highest level in 15 years since April 2008 (5.25% annually). The Bank of England (BOE) was the first major central bank to shift to tightening in December 2021, raising the base rate from 0.1% annually without pause.

Bloomberg Intelligence estimated through its own analysis that UK house prices could fall by up to 10-12% from their peak due to the impact of rising interest rates and other factors.

Meanwhile, with housing supply significantly decreasing compared to rental demand, rental prices are expected to rise sharply. RICS reported that 63% of respondents expect a significant increase in rental prices within the next few months, marking the highest level since RICS began compiling this data.

This content was produced with the assistance of AI translation services.