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UK Houses Prices Dropped longest since 2009

British house prices saw a larger than expected drop in January, down 0.6% and 3.2% below the peak seen in August.

This decrease follows the trend of rising borrowing costs and broader inflation pressures. January's drop in house prices marks the fourth consecutive drop and the longest run of declines since 2009. The prices in the three months to January were down 2.3%, the largest such drop since April 2009.

Nationwide Building Society Chief Economist, Robert Gardner, noted that it will be challenging for the market to regain momentum in the near future due to economic headwinds such as falling real earnings and a weakening labor market. In December, Nationwide forecast a 5% drop in house prices for 2023. The Bank of England reported that the number of approved mortgages in December was at its lowest since the global financial crisis, excluding the start of the COVID-19 pandemic. Gardner added that this decrease in mortgage applications reflects a drop after the mini-budget and it is still too soon to determine if the volume of house purchases will recover. The Bank of England is expected to raise its main interest rate by half a percentage point to 4%, the highest since 2008.

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