UK house prices fall at fastest rate since 2009; recession fears rise as factory output tumbles – business live

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07.15 BST UK house prices fall at fastest rate since July 2009 Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. UK house prices have fallen at their fastest rate since July 2009 as rising interest rates cool the property market. Nationwide has reported this morning that the average house price fell by 3.8% year-on-year in July, the biggest drop since the aftermath of the financial crisis. That’s an increase on the 3.5% annual drop in house prices in June, and takes the price of a typical home down to 4.5% below the August 2022 peak. Prices dipped by 0.2% in July alone, on a seasonally adjusted basis, to an average of £260,828, down from £262,239. Robert Gardner, Nationwide’s chief economist, says the increase in interest rates in recent months have made it more challenging for prospective buyers to afford a mortgage on a new home. Gardner explains: For example, a prospective buyer, earning the average wage and looking to buy the typical first-time buyer property with a 20% deposit, would see monthly mortgage payments account for 43% of their take home pay (assuming a 6% mortgage rate). This is up from 32% a year ago and well above the long-run average of 29%. Moreover, deposit requirements continue to present a high hurdle – with a 10% deposit equivalent to 55% of gross annual average income. This challenging affordability picture helps to explain why housing market activity has been subdued in recent months. There were 86,000 completed housing transactions in June, 15% below the levels prevailing the same time last year and around 10% below pre-pandemic levels. More timely mortgage approval data showed a slight increase in activity in June, though most of these applications will pre-date the more recent rise in longer term interest rates. Moreover, activity is still c20% below 2019 levels. Photograph: Nationwide Data from the Bank of England yesterday showed that mortgage approvals in the UK rose to their highest level since October 2022 last month. That indicates borrowers were scrambling to secure home loan deals earlier this year before interest rates rose higher. Also coming up today UK food inflation has dropped to its lowest level this year. Food inflation decelerated to 13.4% in July, down from 14.6% in June, according to the British Retail Consortium. This is the lowest food inflation level since December 2022, with prices falling cross key staples such as oils, fats, fish, and breakfast cereals. Major blue-chip companies HSBC and BP are reporting results this morning. HSBC has more than doubled its pre-tax profits to $21.7bn, including a provisional gain of $1.5bn on the acquisition of Silicon Valley Bank UK Limited. BP’s profits have dropped, though, following the decline in oil and gas prices compared to last year. The oil giant still made underlying profits of $2.6bn for the second quarter of the year, down from almost $5bn BP made in January-March, while it made almost $8.5bn in the second quarter of 2022. The agenda 7am: Nationwide house price index for July 9am BST: Eurozone manufacturing PMI report for July 9.30am BST: UK manufacturing PMI report for July 10am BST: Eurozone unemployment report for June 3pm BST: US manufacturing PMI report for July 3pm BST: US JOLTS job openings report for June