Average house prices decreased by 0.1% in the 12 months to September 2023, down from an increase of 0.8% in August 2023, the latest data from HM Land Registry has revealed.
The average house price was £291,000 in September 2023, which was little changed from 12 months ago but above the recent low in March 2023.
What’s more, the average house prices over the 12 months to September 2023 decreased in England to £310,000 (negative 0.5%), decreased in Wales to £215,000 (negative 2.7%), but increased in Scotland to £195,000 (2.5%).
In addition, house prices increased by 2.1% to £180,000 in the year to Q3 (July to Sept) 2023 in Northern Ireland.
It was the North East that saw the highest annual percentage change of all English regions, growing by 1.6%, while the South West saw the lowest change, decreasing by -1.6%.
Reaction:
Karen Noye, mortgage expert at Quilter:
“UK house prices have dropped half a percent since August, which has now contributed to a house price fall of 0.1% over the year making the average property in the UK valued at £291,000.
“This morning’s lower inflation figure spells good news though for homeowners at least over the long term as lower inflation should hopefully mean that the Bank of England do not have to raise interest rates much further.
“However, the prevailing view is that interest rates will stay higher for longer causing the slump in buyer demand to be prolonged.
“At present, this has been coupled with sellers unwilling to put their properties on the market meaning that there does remain limited stock stopping any huge price crashes.
“But as more and more people find that their fixed rate mortgage deals coming to an end push may come to shove and properties will have to be listed.
“A surge in stock at a time of limited demand will be bound to take the froth out of what has been a turbocharged market over the last few years.
“Once the Bank of England feels confident to start reducing interest rates, we should hopefully also see confidence return to the property market. The rental market continues to be incredibly tight which does help keep some demand in the ailing market.”
Nick Leeming, chairman of Jackson-Stops:
“The relatively modest change in house prices in today’s ONS figures reflect a market driven by varying supply levels and increasing needs-based buyers.
“Whilst house prices are continuing to adjust and settle into their new normal, it is clear there is a powerful undercurrent of resilience that keeps the market steady.
“Though the market is largely balanced, with wider analysis suggesting that the UK housing market will outperform forecasts this year, the pendulum continues to swing drastically across different areas of the country.
“Across Jackson-Stops’ national network, key commuter towns such as Oxted and smaller cities such as Norwich, Chelmsford and Truro, in October saw an unwavering level of interest from buyers which simply does not match up to the number of properties available to buy, helping to insulate prices.
“However, in other local areas we know the situation has become much more equal, with sellers embracing greater realism in their asking prices in order to ensure offers turn into completions – a clear sign that the enthusiastic pricing of 2020 and 2021 has been left in the rear-view mirror.
“As we enter a traditionally quieter period for completions and instructions, with the national mood shifting from moving boxes to mulled wine, the recent news that some highstreet lenders are bringing sub-5% deals back to the table will be a well-timed boost of confidence to buyers.
“Coupled with the UK avoiding a recession once again in Q3, stability is the order of the day.”
Imran Hussain, director at Harmony Financial Services:
“With inflation dropping as much as it did in October, we are likely to see a little stability in house prices as the year draws to a close.
“However, sellers should not suddenly start thinking it’s their time again as we’re not there yet.
“There are still countless challenges facing the economy, as seen in Tuesday’s Insolvency Service figures showing a rising number of company insolvencies and people taking out Debt Relief Orders.
“We need inflation to fall further and for the Bank of England to cut rates before the property market picks up in earnest.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“It’s no surprise that UK house prices fell by 0.1% in the 12 months to September given the headwinds facing the market earlier in the year.
“Remember that this data is showing completed prices on sales agreed a number of months before September.
“However, with the economy looking to have turned a corner following Wednesday’s better than expected inflation data, and mortgage rates improving by the day, this may be the best time to buy before further house price increases.”
Jamie Thompson, mortgage broker at Jamie Thompson Mortgages:
“Lower inflation is leading to lower mortgage rates.
“Once mortgage rates for those with just a 10% deposit start with a four, don’t be surprised if we see several months of pent-up demand explode and house prices start to surge again.
“With wage increases now exceeding inflation, this means people can borrow more, which will push up house prices.
“Boxing Day is the busiest day of the year for Rightmove. If mortgage rates continue to head down, I think their servers might need upgrading this year.”
Stacey Rohwer, head of investment at IP Global:
“Though this data shows house prices were very slightly in the red in the 12 months to September, the undersupply of housing in the UK is supporting house prices and preventing huge drops.
“The UK has not met its housing supply target since the Second World War. The Government’s current target is to build 300,000 new homes per year, but the actual number of homes being built is far below this.
“In 2022, only 179,300 new homes were built. So, while price growth may drop momentarily, as we have seen with the September Land Registry house price index, the long-term growth will still be there.”
Ross McMillan, owner and mortgage adviser at Blue Fish Mortgage Solutions:
“With a splurge of positive data and rate reductions in recent weeks, buyer sentiment has noticeably changed in Scotland and it’s clear that pent-up demand from those who have been sitting on the sidelines for most of 2023 seems likely to burst onto the market in the early part of 2024.
“In such a fast-moving environment, house price data does lag significantly behind the here and now but although fluctuations in values are likely to emerge from the data in the coming months, the key factors remain that the Scottish property market has stayed robust throughout a difficult year and with buyer confidence improving and affordability for borrowers set to improve, the scene seems set for steady and manageable house price growth throughout 2024.
“The outlook for landlords and renters is perhaps less rosy as Government interventions, onerous regulations and a serious lack of supply of suitable properties for rent, mean that rapid increases in average rents will continue.”
Ben Tadd, director at Lucra Mortgages:
“The higher-than-anticipated drop in inflation, down from 6.7 to 4.6% in October, should signal the beginning of the end of house price drops.
“Yes, there may be a continuation of low or negative house prices for some months to come as the Land Registry data catches up with the market, but this morning’s inflation figures will certainly help to stabilise the property market.
“Consumer confidence is key, and with the lower inflation numbers, this will inevitably lead to lower mortgage rates as swap rates continue to fall.
“All of a sudden, those would-be buyers who were previously sat on the fence as to whether to buy are now peering more confidently over the other side, seeing what their new mortgage payments will be. The good news is that they continue to drop to a much more affordable level.”
Kundan Bhaduri, property developer and portfolio landlord at The Kushman Group:
“Brace yourselves for an influx of house hunters in the coming months. The Chancellor’s plan is finally working as Rishi and Jeremy give inflation a good kicking. Clearly, the ripple effect of this good news is about to hit the housing scene.
“We’re talking lower mortgage rates, boosting buyer confidence and turning people’s property dreams into reality.
“But, hang on, it’s not all sunshine and rainbows. We still have a nationwide puzzle to solve – there’s just not enough housing stock in the market.
“While demand is improving, supply is not. 2024 is likely to see a steady climb in house prices. For the property market to go from zero to hero, we need inflation to keep doing its disappearing act. And how about the Bank of England throwing in a rate cut for good measure?
“That’s the secret sauce we need to supercharge the housing game in 2024.”
Gary Bush, financial adviser at MortgageShop.com:
“Yes, this data makes the property market seem down and out but expect more people to start buying following the positive news that the UK is finally getting to grips with inflation.
“That will translate into lower mortgage rates, which will boost buyer confidence.
“There is a big nationwide problem at the moment, however, which is the lack of supply and properties coming to market, although clearly this is helping support house prices.
“We expect 2024 to be a good, if not stellar, year for the property market and a gradual return to slow but steady house price growth, as demand begins to pick up.”
Craig Fish, director at Lodestone Mortgages & Protection:
“Despite the positive inflation data, I don’t expect house prices to stabilise just yet. Let’s not forget that the Land Registry house price data is around four to five months’ old, so may continue to show negligible growth into early 2024.
“That said, there is a more settled feeling descending on the property market now, and we are starting to see more enquiries from buyers, so I fully expect next year to be an improvement on 2023.
“Prices are likely to remain a little subdued, but with improving mortgage rates the second half of next year could see prices stabilise before starting to increase again in 2025.
“With buy-to-let rates improving also, I expect that whilst rents may continue to increase, the rate at which they do so should decline.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“That was then and this is now, and now is feeling a lot better after Wednesday’s inflation data.
“The Land Registry house price index is based on completed house sales, and so is a lagging indicator of the housing market.
“All telescopes will be firmly planted on the Commons Chamber to see if finally we see some trinkets delivered by the Chancellor later this month, to help ease the pressures consumers are facing.”
Simon Jones, CEO at Investing Reviews:
“The property market may be down, based on this latest data, but following today’s inflation news it is by no means out.
“The time lag is key and things have improved materially for borrowers in recent months.
“The sharp fall in inflation in October will likely support the property market as lenders further reduce mortgage rates and sentiment picks up as households feel the financial pressure relent a little.
“However, let’s not forget that a significant number of borrowers are still to come off their ultra-low fixed rates, which could see an increase in forced sales and therefore supply, putting downward pressure on prices in 2024.
“Any announcement of a stamp duty cut or holiday in the Autumn Statement could also change the direction of travel quite quickly. The direction of house prices could change on a dime in the current economic climate.”
