House prices fell by 0.3% between October and November but remain 10.3% higher than the previous year, according to the latest figures from the Office for National Statistics (ONS).
House price annual growth was strongest in the North West where prices increased by 13.5% in the year to November 2022.
The lowest annual growth was in Scotland, where prices increased by 5.5% in the year to November 2022.
London was the English region with the lowest annual growth, where prices increased by 6.3% in the year to November 2022.
The growth leaves the average price of a house in November standing at £295,000, some £28,000 higher than a year before.
Overall average house prices increased over the year to £315,000 (10.9%) in England, to £220,000 in Wales (10.7%), to £191,000 in Scotland (5.5%) and to £176,000 in Northern Ireland (10.7%).
Reaction
Emma Cox, MD of Real Estate at Shawbrook:
“The positive spell we’ve seen in the markets as of late will help to shine a ray of hope for the property market in 2023, but today’s house price figures show there’s still some catching up to do.
“November’s positive 0.1% GDP growth and the rallying of the FTSE to record highs will certainly help to improve confidence among buyers and sellers, and we expect this will be reflected in transaction activity in coming months. Nevertheless, there are still many first-time buyers feeling the effect of inflation and rising energy costs, which are hampering their ability to get onto the property ladder.
“If the economy continues on its positive trajectory into the next quarter, it could signify a ‘light at the end of the tunnel’ for first-time buyers, but landlords will also need to pay close attention as competition could soon return to the market.
“The seeds of economic improvement quickly spread, and I expect we’ll see many professional landlords working hard to provide a compelling rental offer for tenants in a busy lettings market whilst growing their portfolios with new purchases.”
Vikki Jefferies, proposition director at PRIMIS:
“Although today’s statistics show a decline in the rate of house price growth, it’s important to recognise that figures are still on par with pre-pandemic level and remain relatively strong.
“With rate reductions likely to continue as the new year gets underway and with growing numbers of products returning to market, brokers need to be prepared to help homebuyers and remortgagers make informed choices when it comes to the best product for them. As economic turbulence continues, this involves thinking about future impacts, as well as shorter term outcomes. Increasingly, advisers have a range of tools available to help insulate borrowers to an extent from fluctuating market changes, including increasingly flexible products coming to market, such as those allowing customers to switch on to more affordable rates, should these fall.
“From a lender’s perspective, there is certainly appetite to lend, and we’re seeing clear creative thinking and enhanced proposition development in order to create flexible products that meet customer needs at this time. Overall, independent advice remains essential for homebuyers looking to secure the best deals and benefit from guidance tailored to their unique personal and financial needs.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown:
“House prices dropped between October and November, and while they were still up 10.3% in a year, there’s every sign that the days of double-digit house price rises are numbered. Unfortunately, this is just the overture to the depressing dirge the market will be dancing to in the months to come.
“Sales typically take around three months to complete, but at the moment they’re taking closer to four months. It means November’s sales reflect how the market was looking in late August and September. The vast majority of this period was before all hell broke loose on the mortgage market after the mini-budget on 23rd September.
“However, buyers were already starting to get cold feet. Inflation was running at 10.7%, and until the Energy Price Guarantee was announced on 8th September, we were also living with the horrible threat of another massive hike in energy prices in October. Meanwhile, we’d seen interest rates climb relentlessly for almost a year, and a combination of the two risked pushing monthly mortgage payments out of reach.
“Of course, since then, the market has taken a turn for the worse. Through October and November, the start of the sales process was seizing up, as the repercussions of the disastrous mini-budget reverberated through the market. Fixed mortgage rates surged in October, and while they started to fall in November, they were still above 6% for much of the month. It meant that in November mortgage approvals fell to their lowest level since June 2020. As a result, the RICS residential survey showed buyer demand falling for the seventh successive month, and prices beginning to pull back. It was the weakest measure for price growth since May 2020.
“The shocking state of the market in October and November is likely to feed through into completion figures at the start of 2023 – at which stage house price growth is likely to slow significantly, and eventually turn negative.
“This is an incredibly difficult time to be making buying or selling decisions. If you take the plunge now, there’s a risk you may be over-stretching yourself for a property that’s likely to lose value. You may also be fixing yourself into a more expensive mortgage than you could get by holding off for a few months. However, if you hang on, it means staying somewhere you’re not happy, with no idea of how far or how fast either prices or mortgage rates will fall. Some people will want to wait to see where we are by the spring, while others will buy now – and use the opportunity to negotiate a chunky discount on the asking price.”
James Briggs, head of personal finance intermediary sales at Together:
“November’s dip in house prices, from 12.4% to 10.3%, which could possibly increase demand for property after buyers and sellers held tight during market uncertainty in the past months.
“However, with the FCA warning that more than 750,000 households are at risk of defaulting their mortgages within the next two years, there is a real concern many borrowers will be faced with no choice but to raid their savings and drastically change spending habits to keep up with repayments. Even with today’s fall in prices, how feasible this will be given the pressures on people’s finances already is not yet clear.
“Should this trend grow in the coming months, it’s important that the specialist industry prepares to support these customers who may find they’re otherwise overlooked by mainstream lenders.”
Nathan Emerson, CEO of Propertymark:
“In November, our agents reported a market that was on the cusp of seeing purchasing power handed back to buyers which was a trend we hadn’t seen in months.
“Interestingly, estate agents in London are reporting buyers agreeing sales at under the asking price, however agents in the North West are seeing properties sell for asking price very quickly after being marketed, sometimes in a matter of days.
“Buyers are looking for more affordable properties, if sellers are realistic with their pricing, there are plenty of serious buyers out there that will move quickly.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“Annual house price growth in November may look like a surprise on paper, but the ONS does something other indices don’t — it takes cash buyers into account.
“The prime market in particular is still buoyant, especially among cash buyers, and this may be a factor in keeping prices at this level.
“There are other reasons for optimism. Interest rates in November were still very high following the mini-Budget, but they are now declining and there is a much better choice of mortgages available.
“Equally, it is encouraging to see inflation slowing, which will revitalise the aspirations of home-movers and first-time buyers who will be motivated by falling rates and the possibility of securing a good deal on their home.”
Jeremy Leaf, north London estate agent and a former RICs residential chairman:
“This most comprehensive of all the housing market surveys always commands attention. However, the figures mainly reflect what was happening in the quieter period between September’s disastrous mini-Budget and the lead up to Christmas.
“On the ground, since our return to work nearly three weeks ago, we have noticed the release of some pent-up demand now mortgage rates have begun to fall.
“Activity has been supported by gloomy predictions for prices in the media, which has reduced buyer and seller expectations and resulted in agreed sales at more realistic levels.”
Simon Webb, managing director of capital markets and finance at LiveMore:
“There has been some respite recently with a fall in fuel and oil prices which has fed into the latest small, but welcome drop in inflation.
“The rise in food prices of 16.8% is worrying and so is the fact that although wholesale gas and electricity prices are down, unfortunately householders will not be benefiting as energy suppliers buy energy in advance. Even if they do pass on any fall in price in a few months’ time, in April the government’s energy price guarantee goes up from £2,500 to £3,000, meaning our energy bills will still be sky high. If inflation continues to fall it will be slowly.”
Avinav Nigam, cofounder of real estate investment platform, IMMO:
“This slight fall in house prices was expected, as economic confidence has fallen and interest rates have risen, making purchasing properties more expensive and harder to do.
“Buying property is more expensive due to higher rates. The stress tests applied by banks are also more stringent. The result is that many who had hoped to purchase using mortgage finance will no longer be able to.
“Younger and poorer households are disproportionately affected. Their need for housing is unchanged, but their ability to access it through home ownership is.
“Demand for rental properties continues to grow. The opportunity for professional providers of safe, quality and affordable rental housing for the UK is increasingly clear.”
Jason Ferrando, CEO of easyMoney:
“Judging the overall health of the UK property market based on the short-term erratic measure of monthly house price growth is ill-advised, to say the least.
“Despite November bringing the first actual monthly decline in house prices since October 2021, property values still remain extremely close to their highest point seen throughout the pandemic.
“It’s also important to consider the lagged nature of reporting when it comes to house prices and so what this marginal realignment really represents is a housing market winding down as it approaches the end of the year, not one approaching a cliff edge.”
Iain Crawford, CEO of Alliance Fund:
“The current outlook for the housing market is far more positive than it was just a few short months ago and while we continue to tread with some degree of caution, the general consensus is that the year ahead will bring greater stability.
“With this in mind, the marginal monthly decline seen between October and November is likely to be short lived and is almost certainly being influenced by the seasonal slowdown approaching the festive season.”
Jonathan Hopper, CEO of the buying agents Garrington Property Finders:
“This ONS data captures the moment of peak panic in November, when many estate agents’ phones fell silent and parts of the property market skidded to a stop.
“Yet for all that, the average price paid in November was only 0.3% lower than it was in October. And the annual rate of price growth still stood in double figures, buoyed by the rapid rises seen earlier in 2022.
“In truth the change was more like the turning of an oil tanker than a screeching halt.
“Since then prices have fallen further and the number of transactions has withered. But January has seen more buyers return to the market, even if they are overwhelmingly in the ‘need to move’ rather than ‘want to move’ camp.
“While no-one is talking of a spring bounce yet, this is now a normalising, if not a normal, market. Gradually falling inflation is allowing some to hope that interest rate rises may be less drastic than first feared, and the next couple of months could set the tone for 2023.
“Would-be buyers who are sitting on their hands will want to see price falls contained before deciding to take the plunge, but buyer interest is starting to return.
“However with many first-time buyers frozen out, the total number of sales is likely to be a fraction of last year’s. That’s why I expect transactions to fall harder and further than prices.
“The road ahead will be rocky but it is no longer blocked.”
Charlotte Nixon, mortgage expert at Quilter:
The Government’s UK house price index has shown that prices in November have dropped by 0.3% on average since October 2022. Despite this drop, there has still been an annual price rise of 10.3%, making the average property in the UK valued at £294,910.
“As we head into 2023, the UK must brace for further house price drops as increased energy bills will still cause financial strain for millions in the upcoming months. As a result, many might be more hesitant to move and incur all the expense that comes with it. The Financial Conduct Authority (FCA) estimates that 750,000 people are at risk of defaulting on their mortgage and these people may be looking to sell up to release equity in their home and avoid getting into financial difficulty. This could lead to an increase in housing stock when demand is depressed, causing house prices to drop lower.
“However, Bank of England Governor Andrew Bailey told MPs this week that while there is still a “hangover effect” from the financial instability seen during the prime ministership of Liz Truss, much of the volatility that caused mortgage rates to soar has now normalised. This, coupled with Prime Minister Rishi Sunak’s recent statement that inflation is expected to halve in the next year, and today’s slightly lower inflation figure, hopefully indicates a permanent change in direction for the mortgage market.
“Lower inflation should mean interest rates stabilise and even start to drop with mortgage rates following suit. This could result in mortgage rates dropping to 4% by the end of the year as the new norm, and potentially even lower in the future.
“Additionally, as the housing market cools, lenders may have to compete more for business, leading to lower mortgage deals for customers. This new market environment may make certain mortgage products, such as tracker mortgages, a more attractive option for short or medium-term buyers. Although a drop in house prices might come as bad news for homeowners it, this change in direction might be relatively short lived and as the economy improves, it is likely that the demand for housing will continue to outpace supply, driving up house prices in the long term.”
James Forrester, managing director of Barrows and Forrester:
“The first monthly reduction in house prices in 13 months is sure to spur panic and predictions of a property market collapse, but to do so based on just one month is quite frankly ludicrous.
“The reality is that the property market has well and truly weathered the storm caused by the incompetence of the UK government and remains in fine form despite a very marginal reduction in property values.
“If we were going to see a notable dip, it would have materialised by now. This hasn’t been the case and while the heat of the pandemic market boom may have subsided, property prices remain considerably higher than they were this time last year.”
Marc von Grundherr, director of Benham and Reeves:
“It’s been a swift start to the year and those of us with our ear to the ground will tell you that both buyer and seller enquiries are coming in thick and fast, particularly across the London market.
“So while we may have seen a momentary period of respite towards the end of 2022, there is a renewed level of optimism enveloping the market so far this year.
“We remain a nation driven by the aspiration of homeownership and it’s only a matter of time before this uplift in activity reverses the reduced rates of house price growth seen during the latter stages of last year.”
Chris Hodgkinson, managing director of House Buyer Bureau:
“The current cost of living crisis and the increased cost of borrowing, in particular, have somewhat dampened the enthusiasm of the nation’s homebuyers in recent months and we’re now starting to see this translate to a slight reduction in house prices.
“However, the property market landscape is a fragmented one and while many homeowners will have avoided a dip in the value of their property, there are plenty of areas where house prices have started to slide to a far greater extent.
“While it’s generally expected that the market will remain resolute this year, sellers in areas where the market is coming off the boil are well advised to sell quickly in order to achieve the best price for their home.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“These figures confirm what we are seeing on the ground. There’s a slight readjustment in house prices, but the overall outlook remains steady.
“It is worth bearing in mind that last month saw an unexpected increase in year-on-year prices after the market took changes to stamp duty in the preceding year into account.
“The average home still costs £28,000 more than it did this time last year, but the jury is out on what the year will bring for house prices. Any decreases are unlikely to be as dramatic as we might have predicted a few months ago.
“The future of the cost-of-living crisis and how it could affect affordability is critical when predicting how prices could fluctuate in the months ahead. Today’s inflation figures gave a glimmer of hope that the Government is getting it under control, but there is a way to go before confidence in buying is fully restored.
“Prospective buyers must be able to commit to a mortgage safe in the knowledge that they can keep up with repayments.”
Jack Roberts, CEO of home moving platform SlothMove:
“The big chill is on. Property prices are slipping down across the UK and most buyers are happy to bide their time, hoping for bigger discounts to come.
“At some point a thaw, perhaps brought by the burgeoning battle in mortgage rates slowly coming back down to earth, will bring them back. But with inflation still so high we’re unlikely to see significant cuts in borrowing costs at this stage.
“London, which never fully bought into this bull run, remains a back marker on annual growth but it’s likely to experience smaller falls when this property market correction gets into full gear.”
