House price growth was already slowing before the mortgage crisis hit

Annual house price growth was already slowing before last week’s chaos in the mortgage market threatened to seriously derail the housing market, new figures show.

House prices rose 9.5% on the year to September, from 10% in August, according to the Nationwide Building Society’s monthly house price index.

Graham Cox, a mortgage broker, said the “worm has turned” and predicted a 20% drop in house prices over the next two or three years.

He said: “The events of the past week have fundamentally changed the mortgage market.

“It’s a buyer’s market now.”

London was the region with the smallest increases, with annual growth of 6.7% in the last quarter.

From one month to the next, real estate prices have not increased at all.

The slowdown in growth did not take into account the recent market chaos after last week’s mini-budget, which saw spooked lenders withdraw thousands of mortgage deals as the value of the pound plummeted.

Nationwide warned that affordability was becoming increasingly stretched with first-time buyers’ deposits as a proportion of wages at a record high.

The data revealed that 10 of the UK’s 13 regions saw slower growth between July and September than in the spring.

Tomer Aboody of MT Finance, a lender, said rates rising to record highs would trigger a “change in sentiment” as potential buyers decide to wait until they are “well within their means” to make a purchase.

However, prime properties in London are expected to retain their values, he said, “as overseas buyers look to take advantage of the weak pound”.

Nationwide said the number of mortgages approved for home purchases remained below pre-pandemic levels, adding that surveyors were reporting a drop in applications from new buyers.

Chancellor Kwasi Kwarteng’s stamp duty reduction could provide “some support for activity and prices”, he said.

But Mr Gardner added: ‘The significant increase in prices in recent years, together with the significant increase in mortgage rates since the start of the year, have pushed the typical mortgage payment as a share of take-home pay well into the above the long term. medium.”

Prices in the South West remained the strongest, according to the report, although growth fell further from 14.7% to 12.5%. In the East Midlands, price growth fell from 11.4 pc to 12.3 pc.

The data revealed that London was the worst performing region, despite a slight increase in house price growth, from 6% to 6.7%.

The average property price in the capital is £534,545, almost double the national average of £273,135.

Jonathan Hopper of Garrington Property Finders said the coming months were likely to see price inflation cool.

“So far there are jolts rather than tremors,” he said. “But the once boundless confidence and momentum of the housing market is being shaken.

“The momentum is changing and more and more buyers are stopping to think or playing hardball on what they’re willing to pay.”