Average house prices increased by 0.6% in the 12 months to July 2023, down from a revised 1.9% in June 2023, according to the latest UK House Price Index from the Office for National Statistics (ONS).
The average house price was £290,000 in July 2023, £2,000 higher than 12 months ago, but £2,000 below the recent peak in November 2022.
Average house prices increased over the 12 months to July 2023, to £309,000 in England (0.6%), £192,000 in Scotland (0.1%), while average house prices in Wales decreased to £216,000 (negative 0.1%).
Average house prices increased by 2.7% to £174,000 in the year to Q2 (April to June) 2023 in Northern Ireland.
The North East saw the highest annual percentage change of all English regions in the 12 months to July 2023 (2.7%), while the South West saw the lowest (negative 1.0%).
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Tony Hall, head of business development at Saffron for Intermediaries:
“Today’s figures are no surprise given the affordability challenges that exist in the market at present.
“However, the downward trend in house prices is far less significant than some analysts were predicting at the beginning of the year, and recent reductions in mortgage rates could stimulate increased activity in the market in the coming weeks and months.
“Scotland and parts of the North-West are also giving us reason to smile, with the housing market in these areas showing notable resilience through a challenging period.
“That being said, with interest rates likely to rise further before the end of the year, affordability will remain a key challenge for those looking to buy, or build, a home.
“The best approach for potential borrowers, particularly those who believe their financial circumstances might traditionally prohibit them from accessing the mortgage market, is to seek independent financial advice to find a product most suited to them.
“At Saffron, we place an emphasis on working closely with brokers to find solutions for customers that work, no matter what their circumstances may be.”
Conor Murphy, CEO and founder of Smartr365 and Capricorn Financial Consultancy:
“We’re approaching the one-year anniversary of the Truss Budget and after a year of fairly dramatic interest rate changes, house prices are still feeling the knock-on impact.
“There are though some signs that the mortgage market is beginning to stabilise and average rates for fixed products are now beginning to fall.
“Of course, these changes will take some time to trickle through to house prices, but improved rates could mean that some buyers, who might have been choosing to sit tight over the summer, could now come to market.
“We might even see a busier autumn and winter, setting the tone for a more positive end to the year.
“When activity does pick up again, it is vital that brokers are equipped with the necessary resources to support new buyers, and those looking to remortgage.
“The ongoing cost-of-living crisis means that brokers may well see more customers with increasingly complex circumstances looking to re-evaluate their finances, and technology can lend a helping hand here.
“In the longer term, prioritising the development and adoption of AI and digital technologies within broker firms will be essential in streamlining processes and ensuring advisers are able to accurately and effectively support their customers in the future.”
Malcolm Webb, technical director at Legal & General Surveying Services:
“While the cost-of-living crisis means affordability remains an issue, a quieter market and more subdued house price growth will make the challenge of coming up with a deposit and finding a new home less of a hurdle for some, particularly first-time buyers.
“This demand from those looking to step onto the ladder can be seen in the ever-growing popularity of the Bank of Family, which this year is the busiest it’s ever been, playing a role in nearly 320,000 housing transactions.
“More support is needed for those who can’t rely on the generosity of family or friends, but for people looking to make their first step into homeownership, or even their next move, it’s important they get the right support from market experts including mortgage advisers and surveyors.
“Buying a home is often the single most expensive purchase someone makes.
“A surveyor will be able to identify any potential issues with the building and flag areas that need significant repairs.
“This isn’t just about giving peace of mind to buyers, and the family members supporting them, that they are investing in a sound choice of property, but it can even give them critical information to help renegotiate with vendors and ensure they are paying a fair price.”
Nathan Emerson, CEO of Propertymark:
“It is no surprise we are seeing such a drastic slowing in house price growth due to the unprecedented pace at which they increased last year.
“This drop is needed and should not be seen as a negative as house prices remain up compared to what they were last year, and this slowing is playing a crucial part in combatting rising interest rates and improving homebuyers’ affordability.”
Harriet Scanlan, lettings manager at Antony Roberts:
“We are still very much in the grips of stock-deprived market.
“Just this week we launched two new rental properties which both attracted multiple offers and subsequently exceeded asking price.
“There is plenty of evidence like this which clearly demonstrates how lack of supply combined with high demand affects the rents achieved.
“One of the primary drivers for private landlords exiting the buy-to-let sector are changes in tax regulations, primarily the reduction of mortgage tax relief.
“In recent months, the interest rate hikes have also had a direct hit on some landlords’ profit margins. However, those landlords who are able to hold their nerve are being rewarded with minimal-to-no void periods and escalating rental prices.”
Emma Cox, MD of real estate at Shawbrook:
“While all eyes will be on the Bank of England’s base rate decision tomorrow, the latest house price data gives reason to be optimistic for the UK property market.
“Buyer demand has seen a positive increase, pushing up asking prices as sellers become more confident to list.
“And while competition is increasing, opportunities in the rental market are still there for professional landlords seeking to acquire quality property and fulfil ongoing demand.
“With potentially lucrative financial benefits, landlords may also consider investing in houses in multiple occupation (HMOs) to diversify their portfolio and maximise rental yield.”
Anna Clare Harper, CEO of GreenResi:
“The most obvious and immediate cause of this slowdown in growth is higher interest rates, which make buying and owning property less affordable regardless of house prices.
“2 million property owners face two to three times their previous housing costs by the end of 2023 due to variable rates rising or fixed rate terms coming to an end.
“These stressed property owners are often seeking a fast sale; and investors we work with are able to negotiate attractive deals, which might be 20-30% lower in price than this time last year.
“However, house prices are not expected to tank, since the vast proportion of homes are owned outright by households with ‘housing privilege’.
“Outright home ownership with no mortgage is the largest – and luckiest – group of property owners. 8.8 million (36%) homes in England are owned outright, and they are unaffected by mortgage interest rates. For this reason, fears of a ‘house price crash’ are unrealistic.”
Mark Harris, chief executive of SPF Private Clients:
“Swap rates, which underpin the pricing of fixed-rate mortgages, have continued their decline in recent weeks after a period of extreme volatility.
“This is giving lenders the confidence to cut their mortgage rates, with a number making significant reductions and more expected to follow.
‘The markets reacted favourably to the latest inflation data this morning, with five-year swaps falling to 4.52% from 4.64% yesterday.
“While another base rate rise is expected, it is looking as though it is close to its peak, which will be welcome news for hard-pressed borrowers.
“There is a strong argument for the Bank of England to now pause rate rises in order to let the dust settle.
“Consecutive base rate rises have been painful; it’s time to let them take effect, rather than causing continued anxiety and distress for borrowers.”
Marc von Grundherr, director of Benham and Reeves:
“Much has been made about the decline of the property market, but the truth of the matter is that house prices continue to sit at their highest levels this side of the millennium and only marginally off the market peak seen towards the backend of last year.
“There are sure signs that stability is returning to the London market, with the capital seeing one of the strongest rates of monthly house price growth.
“This has been largely driven by international buyers who have been less deterred by the current mortgage landscape and the higher rates that have caused many domestic buyers to sit on the fence.
“So yes, mortgage affordability remains an issue for many buyers, however, those looking to sell should rest assured that their home will still command a solid good price in the current market, whether that be in London or any other area of the nation.”
James Forrester, managing director of Barrows and Forrester:
“The true test of the property market is how sold prices are performing and, as it stands, we’re yet to see any notable dip in this respect. Certainly not the 30% crashes predicted by some industry ‘experts’.
“There’s no doubt the market is cooling due to a reduced level of market activity on the side of the nation’s buyers, but given the turbulent economic times of late, today’s figures can be viewed as extremely positive.”
Jonathan Samuels, CEO of Octane Capital:
“Not only have house prices remained impervious to the wider economic landscape, but inflation has fallen by a greater degree than expected and the Bank of England may well choose to keep the base rate frozen at 5.25% as a result.
“This will be welcome news for the nation’s homebuyers who have already started to benefit from many lenders reducing their fixed rate offerings this week in response to a drop in swap rates.
“Looking forward, further reductions to mortgage rates could be on the cards as the economic picture improves, although it’s too soon to say for sure.”
Chris Hodgkinson, managing director of House Buyer Bureau:
“The property market has become an increasingly difficult place for buyers in recent months and this dent in market activity has caused the rate of house price growth to slow.
“Given the lagged nature of house price reporting a reduction could well be on the cards, however, a return to normality is no reason to run for the hills in anticipation of a market crash.”
Mitchell Fasanya, co-founder and CEO of Searchland:
“While the UK property market may be treading water to a certain extent where topline house price growth is concerned, it’s clear that the new-build sector is keeping the ship afloat.
“New-build house prices are up 13.8% annually versus a 1% rate of growth across the existing market and this should help reassure the nation’s housebuilders that now is as good a time as any to bring new stock to market.”
Paul Glynn, CEO at Air:
“It is unsurprising to see a slight slowdown in market activity this month and a dip in house price growth as the cost-of-living crisis continues to strain consumer purchasing power.
“However, it is important to remember the resilience the market has demonstrated over the last few years when met by economic challenges.
“As borrowers navigate these currently unfavourable conditions, it is crucial that advisers are on hand to offer their support and are well versed in the various options available.
“Access to the necessary tools and resources will help advisers deliver well-tailored guidance to help them find the best possible outcomes for their customers.”
Ben Waugh, managing director at more2life:
“As the ongoing cost of living crisis squeezes borrower incomes, it’s not hugely surprising that activity in the mortgage market is slowing down.
“The UK housing market is resilient enough to stay the course in choppy waters, but the consecutive increases in the base rate have created a downward pressure on prices, although they are higher than this time last year.
“For older borrowers facing increasing mortgage repayments ahead of retirement, the current economic turmoil may provide a reasonable motivation to reassess their financial options.
“Times are challenging, especially for those who are considering whether their pension will be enough to support them.
“For the over-55s, seeking expert independent advice could offer actionable solutions and more importantly, some much deserved peace of mind.”
Bob Singh, founder at Chess Mortgages:
“As seen in this latest data, the downward pressure on house prices has been relentless of late due to the interest rate rises we have seen over the past year.
“Mortgage rates have reached dizzy heights not seen for well over a decade.
“Homeowners have had to grapple with soaring mortgage rates and soaring inflation with no real growth in household incomes.
“However, things could finally be turning a corner. It’s now a buyers’ market and sellers are pricing more realistically, which should stimulate activity.
“With Bank Rate likely close to its peak, now could be a good time to enter the property market, a market that many have been observing from the side lines.
“Lenders are reducing rates on almost a daily basis to secure market share as lender confidence grows. Mortgage brokers are seeing more enquiries after a quiet-ish August.
“The rest of 2023 looks promising.”
Imran Khan, co-founder and CEO at PropertyLoop:
“While Wednesday morning’s inflation data was very encouraging, we’re far from being out of the woods.
“Although the Bank of England may consider a pause in rate hikes at tomorrow’s meeting, another increase is likely in this cycle.
“The property market remains under significant pressure. We anticipate house prices will continue to decline well into 2023.
“On the ground, sellers are recalibrating expectations, often slashing prices to secure deals. ”
“Buyer activity remains sluggish and the new affordability landscape has side-lined many.
“Despite rate wars among lenders, these pale in significance compared to broader rate hikes and stringent affordability checks.
“The property market faces more turbulence before any turnaround is likely. Optimism should be tempered with realism.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“The August inflation data was a welcome surprise but consumer confidence is still low and the property market remains very quiet.
“Big ticket purchases such as buying a new home are not a huge priority for many people right now, keeping their heads above water is, and so we will continue to see further downward pressure on house prices.
“The big issue with these figures is that they are reliant on Land Registry figures that are 3 to 6 months behind in recorded data, so these figures are more reflective of houses sold in January this year, and nothing like what house prices on the ground are as of now.”
Craig Fish, director at Lodestone Mortgages & Protection:
“Without a doubt, we will see further drops in house prices, and these are only likely to get worse in the coming months, as more data is released.
“It’s important to remember that the data we see from all indices is a little historic, but from the Land Registry even more so as it is based on transactions that happened several months ago.
“It’s going to take more than positive inflation data and a rate war by lenders to make a significant impact on property transactions as we approach the end of the year.
“Unless rates drop significantly below 5%, and house prices stabilise, neither of which is looking likely, then I suspect the last few months of 2023 will be more of the same. Let’s hope 2024 gets off to a flying start.”
Andrew Montlake, managing director at Coreco:
“House price falls are inevitable given the prevailing high interest rate environment, but drops are in line with expectations of a correction as the pandemic froth is blown away.
“Whilst it will be a buyers’ market for some time yet, as inflationary pressures and mortgage rates ease, the old issues of too little supply versus pent-up demand will resurface and protect the market from dramatic drops.
“The housing market will still prove to be somewhat robust and the ‘doom-mongers’ wrong once more.”
Charles Breen, founder and director at Montgomery Financial:
“While falling house prices are great for first-time buyers, helping them to get onto the ladder, they’re not so great for people desperate to upsize but they can’t because they no longer have the required equity in their current property to put down a big enough deposit on their onwards purchase.
“However, what has been stalling the market has been a lack of first-time buyers so anything that encourages them back into the market is definitely welcome, as no one can move without someone lower down on the ladder making a move.
“The rate war is definitely helping transaction levels pick up. It’s now up to us brokers and also estate agents to spread the word of this to try and change the narrative on the market, as its not all doom and gloom.”
Ranald Mitchell, director at Charwin Private Clients:
“It has not been a good time for sellers, with housing supply reasonably strong and demand weak, largely driven by the costs of borrowing and poor consumer confidence. This is driving asking prices down to try and entice the right buyers to make offers.
“Mortgage market pricing is continuing to head in the right direction, but it is unlikely that there will be much change for the remainder of the year, and all eyes are on the first quarter of 2024, when demand will hopefully start to recover.”
Ross McMillan, owner and mortgage adviser at Blue Fish Mortgage Solutions:
“With the inflation data beginning to show positive signs at last and lenders chipping away at rates, as the leaves begin to fall outside, it’s actually the green shoots of market recovery that can now be seen poking through the dreich Autumn weather.
“In Scotland, house prices have remained stubbornly solid in comparison to other areas of the UK and the first-time buyer market and demand has proven particularly resilient and strong throughout the year, but even more so in recent weeks as lower rates and boosted confidence have begun to filter through.
“Momentum looks set to grow on the positive sentiment now returning and although winter will likely see the usual seasonal lull, a launchpad for a strong start to 2024 is now very realistic.”
Austyn Johnson, founder at Mortgages For Actors:
“We have seen a fair amount of down-valuations recently and I feel that the surveyors are being wary.
“However, this could end up with lower priced properties hitting the market, which will encourage buyers even more.
“I see a good end to 2023 and a decent start to 2024.
“Lenders will always have a rate war, as it’s supposed to be competitive, but we will need to make sure we spread the work out well or we will end up with another rush on lenders and them raising rates again.”
Peter Stamford, director and lead adviser at Moor Mortgages:
“If you squint really hard, you’ll see a subtle beacon of hope for first-time buyers, and many could find a hidden gem in the current landscape.
“However, for those aspiring to ascend to a larger home, the path seems somewhat obscured, as obtaining sufficient equity becomes a steep climb.
“As we traverse this uneven market terrain, it appears wise for the Bank of England to adopt a softer stance, boosting consumer confidence.”
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management:
“Whilst the latest data shows a fall in house prices, we have to remember that these falls are quite minor in the context of two years of record house price growth.
“It would be fair to say that we’re not seeing house price falls, more a correction of some of the pandemic premium that swept through the market in 2021 and 2022, fuelled by the shift to work-from-home, sub-2% mortgage interest rates and the stamp duty holiday.
“The pendulum has well and truly swung the other way now, with many firms asking employees to spend more and more time in the office, stamp duty back in place for the vast majority and mortgage interest rates at 5% or 6%.”
Steven Hargreaves, mortgage and protection adviser at The Mortgage Co:
“It’s no surprise that the Land Registry House Price Index released today showed a further drop in house prices.
“Property sales during the spring and summer have been sluggish, and vendors have had to price accordingly to find those elusive buyers.
“We are optimistic that the busier autumn housing market, along with the current interest rate war and lower inflation, will all be positive markers that the housing market is moving again.
“We have seen an upturn in first-time buyer enquiries starting in late August and running through September, indicating there is plenty of demand.
“Speaking to local estate agents who are reporting higher levels of new instructions also bodes well.”
Arjan Verbeek, founder and CEO of Perenna:
“While we’re seeing house price growth slow, it does not solve the underlying problem preventing many buyers from stepping onto the housing ladder.
“UK house prices are still significantly higher than the current income multiples offered by most high-street lenders, which average between four to five times more than an individual’s annual salary.
“However, according to ONS, house prices are currently 8.3 times higher than average annual earnings.
“This income limit is due to several factors, yet the UK’s reliance on short-term fixes is part of this problem due to how risk affordability is calculated by lenders.
“If risk is mitigated away more from borrowers, and lenders know what homeowners will continually pay in 10, 15 or even 20 years’, this could open up affordability significantly and ultimately allow many more to buy a home.
“European counterparts such as Denmark rely on mortgage banking models which are long-term, fairly priced, and create an affordable housing market.
“As macro-economic volatility continues, the benefits of long-term fixed rate mortgages are clear.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“As high borrowing costs continue to squeeze buyer budgets, the knock-on effect for sellers is reduced asking prices and an overall dampening effect on house price growth.
“The housing market is proving to be more resilient than expected, as buyers adapt to higher lending rates and sellers price their properties accordingly.
“But these latest house price figures come a day before the Bank of England is predicted to raise its borrowing rates for the 15th consecutive time, as it continues to grapple with stubbornly high inflation.
“Figures today reveal that UK inflation fell in August, potentially reducing the pressure on the Bank of England to raise interest rates, but the figure is still three times above the 2% target.
“Those considering a move will certainly be keeping a close eye on the announcement tomorrow, and its effect on mortgage rates.
“Lenders have been slashing borrowing rates as they compete for business, and they should have already factored in an expected 15th successive base rate rise.
“If borrowing costs remain steady, or even continue to fall, then confidence should remain strong.
“The Bank of England base rate is expected to reach its peak, offering some relief, especially for first-time buyers, while also helping to maintain demand and keep the housing market steady.”
Richard Harrison, head of mortgages at Atom bank:
“Today’s data shows house prices are rising more slowly, with an annual increase of 0.6%.
“This change was somewhat anticipated when you consider the sharp rise in borrowing costs customers have faced over the summer months, which has led to purchasing activity falling considerably below the levels seen last year.
“This is particularly true of London, which has seen house prices fall by 0.8% annually as customers face greater affordability challenges in the capital.
“Most commentators expect prices to remain suppressed over the short-term, but do not expect to see double digit falls on the basis that employment levels perform as expected.
“Looking more positively at the situation, moderately lower house prices coupled with on-going growth in wages could improve affordability for prospective buyers.
“In addition, mortgage pricing has been falling during September and could continue with inflation dropping faster than expected.
“That being said, borrowers should still get used to higher rates, with the base rate expected to remain higher for longer.”
