Average house prices decreased by 2.1% in the 12 months to November 2023, down from a drop of 1.3% in the 12 months to October 2023, according to the latest ONS House Price Index.
The average house price stood at £285,000 in November 2023, down £6,000 year-on-year.
The data reveals that average house prices over the 12 months to November 2023 decreased by an average of 2.9% in England to £302,000, decreased 2.4% in Wales to £213,000, but increased by 2.2% in Scotland to hit an average of £194,000.
In addition, average house prices increased by 2.1% to £180,000 in the year to Q3 (July to September) 2023 in Northern Ireland.
The North East was the English region that saw the smallest decrease in average house prices during this period, down 0.4%, while London saw the largest fall, down 6%.
Iain McKenzie, CEO of The Guild of Property Professionals, commented: “A fall of around 2% in the space of 12 months is modest considering the scale of the challenges that have faced the economy.
“Forecasts at the start of last year suggested prices would fall off a cliff, following significant increases during the pandemic years.
“Today’s figures show that UK house prices have decreased by £6,000 which – although will be unwelcome news to sellers – could have been much worse.
“The property industry has always been marked by adaptability, and estate agents across the country have been able to work with sellers to keep healthy levels of properties on the market.
“Dreams of homeownership have also endured, driven in part by the demand from renters to move away from the expensive rental market.
“While we saw a slight increase in inflation today, it has still been more than halved since earlier last year and this should eventually trickle down to how much prospective buyers are able to save for a deposit.
“High interest rates remain an obstacle for many, with repayments on some deals outstripping affordability. Lenders are becoming more competitive with their offers, but it may mean shopping around a bit more and looking beyond the rates offered by your bank.”
Nicky Stevenson, managing director at Fine & Country, said: “Realistic pricing from sellers who were more willing to negotiate with buyers softened house prices in November, but the time lag in the ONS’ reporting means that it feels like much has already changed.
“Many forecasters have made positive predictions for house prices in 2024, underlining the property market’s resilience, and there are many reasons for cautious optimism.
“Stable, or better yet falling, interest rates will help draw greater numbers of buyers to the property market — and lenders have started the year by offering increasingly competitive mortgage rates, widening affordability and increasing demand.
“The property market is getting busier, with more sellers marketing their homes to capitalise on growing consumer confidence and activity. They are selling to a very motivated pool of buyers who are still quick to snap up good-quality properties in desirable areas.
“Despite this, there could still be some bumps along the way as today’s small rise in inflation reminds us that the economy is not out of the woods yet. The next couple of Bank of England decisions will play a big role in determining whether increased activity levels can be sustained in the early part of this year.”
Nick Leeming, chairman of Jackson-Stops, commented: “The figures published today suggest a frosty end to the year with buyers putting their searches on hold in order to see how mortgage rates would react as inflation fell once again. 2023 was defined by mortgage affordability pressures and a shift from immense competition, towards a smaller, more committed buyer pool.
“While higher mortgage rates will continue to weigh on the majority of buyers minds, falling inflation will sow the seeds for a busier start to the market in 2024.
“Lifestyle will be the dominant call for the majority of buyers, driven by distance to work, expanding and retracting families, and home needs. This committed pool of buyers will be targeting only the best-in-class homes as sale listings increase, making price a significant determining factor for a successful sale. The frenzied market that emerged post-pandemic is not the case anymore. Even as buyers adjust to higher mortgage rates the need to get better value from the property itself is likely to play a part in final agreed prices.
“The 2024 property market is also likely to be impacted by an election. Always a divisive issue, housing is likely to be pushed up the political agenda with major parties both challenging for the hearts and votes of current and prospective homeowners. Supply shortages, market liquidity, and the increasing age of first-time buyers, are all likely to be key discussion points for parties to define positions on. In the coming months, the property market will be gathering around its crystal ball to predict what all political outcomes could mean for local and national property markets.”
Tom Bill, head of UK residential research at Knight Frank, said: “UK house price declines are bottoming out as mortgage rates fall, which should feed through into the official data in coming months. Financial markets now expect five interest rate cuts of 0.25% this year as inflation comes under control more quickly than expected, which has improved the outlook markedly for buyers and sellers. We expect UK prices to rise by 3% in 2024 although growth should be lower in areas with tighter affordability constraints like London. Political instability has become the biggest risk facing the market, as we have seen this week, although if an election takes place in the second half of the year, activity should see a seasonal jump in the spring.”
Verona Frankish, CEO of Yopa, commented: “Sold prices are always the last indicator of market health to show improvement and so while they remain down, this certainly isn’t a sign of an impending market crash, more the final days of a previous period of stagnation.
“In fact, we’ve already seen evidence that the market is starting to improve and not only are buyers returning, but we’ve seen thousands of sellers return to the market already this year who previously failed to secure a buyer in 2023.
“With momentum building on both sides, it won’t be long before this uplift in activity helps to push sold prices in the right direction.”
Jeremy Leaf, north London estate agent, said: “These figures reflect housing market activity of at least a few months ago, even though they are the most comprehensive of all the surveys as they include cash and mortgaged transactions.
“At that time, buyers and sellers were reacting to uncertain economic times before inflation and mortgage rates had started to stabilise and fall. On the ground, the situation is different now with early signs of an improvement in confidence, translating into more viewings and offers.
“However, the inflation figures today show there is still a long way to go and it is likely to be a bumpy ride.”
Anna Clare Harper, CEO of GreenResi, commented: “In nominal terms (before inflation), house prices are down by 2.1% annually in the year to November 2023.This softer pricing is not a surprise, because higher interest rates are a more significant determinant of affordability for buying and owning a home than house prices. Demand is down because it is harder to afford to buy or own a property for those reliant on mortgage finance.
“At the same time the largest – and luckiest – group of homeowners own 8.8 million (36%) homes in England outright with no mortgage. These property owners are unaffected by mortgage interest rates.
“So, although demand from mortgaged property owners is down, outright ownership is a ballast keeping pricing stable. What’s more, the supply of homes is constrained. As a result, although some investors we work with fear significant pricing corrections, the ongoing supply-demand imbalance suggests that fears of a house price crash are overblown.”
Colby Short, co-founder and CEO of GetAgent.co.uk, added: “Although we may have seen an uplift in front end market activity in the run up to Christmas, both in the form of mortgage approvals and mortgage approved house prices, this growing positivity is yet to filter through to actual sold prices.
“Of course, it’s only a matter of time before it does and so while a seasonally influenced drop in property values may seem like bad news, we fully expect this trend to reverse as the market gets back up to speed in 2024.”
Daily news email from EYE
Enter your email below to receive the latest news each morning direct to your inbox.