House prices see biggest monthly fall since June 2020, says Nationwide
THE average house price fell by 1.4% month on month in November, Nationwide says.
November's drop followed a 0.9% month-on-month fall in October and marks the biggest monthly fall since June 2020.
The average house price in November was £263,788, Nationwide added.
It comes after Halifax said house prices fell by 0.4% in October with mortgage rates peaking.
The house price slowdown comes after mortgage rates hit a 14-year high in September.
This was caused by political and economic turmoil following former Chancellor Kwasi Kwarteng's mini-Budget.
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An increase in mortgage rates has meant people thinking about buying homes are holding off, which in turn sees house prices drop.
It comes amidst the cost of living crisis with households already contending with increased energy bills and food prices.
Robert Gardner, Nationwide's chief economist, said: "While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum.
"Housing affordability for potential buyers and home-movers has become much more stretched at a time when household finances are already under pressure from high inflation."
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He added: "The outlook is uncertain, and much will depend on how the broader economy performs, but a relatively soft landing is still possible."
Tom Bill, head of UK residential research at estate agent Knight Frank, said: "The impact of the mini-budget continued to reverberate in November, with the largest monthly fall in house prices since the early days of the pandemic."
He continued: "Mortgage rates should keep edging downwards as the effects of the mini-budget wash through the system, which should settle the nerves of buyers and sellers, even as a 13-year period of ultra-low borrowing costs comes to an end.
What will happen to house prices in the coming months?
Experts are predicting house prices will continue to fall over the coming months as increased mortgage rates keep potential buyers off the market.
Nick Morrey, technical director at mortgage brokers Coreco, said house prices may fall by up to 10% over the next year.
"A fall in prices after two very strong years and the cost of living rising was anticipated," he said.
"We can expect this to continue through into 2023 but settle down as the year progresses."
This will be good news for first-time buyers wanting to get onto the ladder, but with mortgage rates higher than before it might be harder to get approved for one.
Most people will see a drop in the value of their home, raising fears of households falling into negative equity.
This is when a house or flat is worth less than when you took out a mortgage on it.
But because prices have gone up so much in recent years, this probably won't be the case.
Despite recent drops in house prices, year-on-year they're still up.
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Nationwide's House Price Index said the average price of a home in November 2021 was £252,687, over £10,000 less than November this year.
Rhys Schofield from Peak Mortgages, said: "House prices having probably increased by 20% in the last two years so most homeowners have still done very well in the 2 ½ years."