According to mortgage lender Nationwide, British house prices experienced the largest monthly drop in over a decade in the previous month. The data adds to signs of a slowdown in the

housing market, caused by high inflation and rising borrowing costs. The year-on-year decline of 1.1% was the biggest since November 2012 and the first annual decrease since June 2020, during the early stages of the COVID-19 pandemic, when prices dropped by 0.1%.

In January, separate data from the Bank of England revealed that British lenders approved the fewest number of mortgages since 2009, excluding the pandemic's initial slump. The current trend is expected to continue, with analysts in a Reuters poll predicting a 2.4% decline in house prices for 2023. However, this is a smaller decrease than previously anticipated, as a strong job market and diminishing recession concerns offset the impact of higher borrowing costs.

Nationwide also reported a sixth consecutive month-on-month decrease of 0.5% in comparison to January. This is the longest run of such falls since the global financial crisis of 2007-2009. Furthermore, house prices are now 3.7% lower than their peak in August 2021.

The current state of the market can be attributed to the steep rise in official interest rates for over a year, and the mortgage market was further disrupted in late September and October following former Prime Minister Liz Truss's mini-budget, which led to an increase in market borrowing costs.