Housing prices are plummeting and new homes are being halved as new poverty takes over the market.

The crisis engulfing the UK housing market deepened as annual prices fell for the first time in three years.

The fall in mortgage approvals for homebuyers adds to the list of grim statistics hitting the housing industry.

Homebuyer mortgages fell for the fifth month in a row in January, according to data from the Bank of England.

Approximately 39,600 home mortgage loans were approved in January, compared to 40,500 in December. Excluding the pandemic, the latest total registrations were the lowest since January 2009, when 32,400 were registered.

The actual interest rate normally paid on new mortgages rose to 3.88% in January, according to a report from Money and Credit Bank.

Bank of England Governor Andrew Bailey added to the fears of homebuyers when he warned that interest rates may have to be raised again to bring down the cost of living. Higher rates may be appropriate, he said.

“I caution against saying that we have finished raising bank rates or that we will inevitably have to do more,” he said. The Bank’s rate setting committee would like more information on the impact of the series of rate hikes on the UK economy before evaluating how best to bring inflation back to the 2% target rather than the current 10.1%.

House prices fell 1.1% year-on-year last month, according to Nationwide.

Prices are now 3.7% below their peak in August 2022. The last time UK house prices rose annually was in December 2012.

Robert Gardner, Nationwide’s chief economist, said the mini-budget pushed prices down last September, but while financial markets have “normalized for some time now, housing activity has remained subdued.”

“This likely reflects the ongoing impact on confidence, as well as the cumulative impact of financial pressures that have weighed on budgets for some time.

“Indeed, inflation continues to outpace wage growth and mortgage rates remain well above 2021 lows.”

Mr. Gardner said it would be difficult for the market to regain more momentum as unemployment is expected to rise as the economy contracts.

“Despite a slight decline in home prices, for a potential middle-income buyer looking for a typical home, mortgage payments as a percentage of wages remain well above the long-term average,” he said. called.

“Moreover, deposits remain out of reach for many and maintaining a deposit remains a challenge as the cost of living rises, especially for those in the private rental sector where rents have skyrocketed.

Persimmon, one of the UK’s biggest builders, has exacerbated the housing crisis as the company announced plans to nearly halve the number of homes it brings to market this year.

Persimmon said it will build and sell 8,000 to 9,000 homes in 2023, up from nearly 15,000 a year earlier.

This year will be “difficult,” said Persimmon. CEO Dean Finch said: “The market remains uncertain. Sales data for the past five months is leading to a significant drop in this year’s deliveries, and with it margins and profits.”

Persimmon’s pre-tax profit fell as another £275m was set aside to cover the costs of securing the building following the Grenfell disaster. Profit was £731m and revenue rose to £3.8bn.