The average UK house price experienced a 1.2% year-on-year decrease as of October 2023, falling to £288,000, which is £3,000 lower than the previous year, according to the latest HM Land Registry data. This decline is part of a broader trend observed in the UK housing market.
In England, the average house price dropped by 1.4% to £306,000, while Wales saw a more significant decrease of 3.0%, bringing the average house price to £214,000.
In contrast, Scotland reported a slight increase of 0.2%, with the average house price reaching £191,000. Northern Ireland, on the other hand, showed a 2.1% rise in average house prices, with the figure standing at £180,000 for the year to Quarter 3 (July to September) 2023.
Regionally, the North East of England was the only region to see an increase in average house prices over the 12 months to October 2023, with a modest rise of 0.2%.
London experienced the most significant drop, with average house prices falling by 3.6%, although it remains the most expensive region in the UK, with an average house price of £516,000.
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Kevin Roberts, managing director, Legal & General Mortgage Services
“UK house prices have ended the year on a stronger footing and the outlook for pricing is much more optimistic now compared to this time last year where doomsayers were predicting a drop of around 10%. In reality, the fall has been around half that, or less in some regional cities like Bristol, where roughly two-thirds of properties on the market in certain postcodes are currently under offer. House prices are very closely linked to interest rates, which have settled considerably as the year has gone on, dropping for twenty weeks on the bounce.
“Usually we would see a quieter few weeks in the immediate run-up to Christmas, but buyers have pleasantly surprised us by remaining very active. The important takeaway for anyone looking to bag a new home as an early Christmas present is to speak to an expert adviser, who can explain the nuanced outlook for your situation, in your area, and for your property type in detail. The market remains price-sensitive, but there are good deals to be found, particularly if guided by a qualified adviser.”
Emma Cox, MD of Real Estate at Shawbrook Bank:
“Another drop in October probably signifies the beginning of the expected cooling of house ices starting to filter through, but I’m not expecting a sharp decline. The shortage of available homes on the market is contributing to the relative resilience of house prices. For professional investors, the rental market is still active with demand outstripping supply and rents continuing to rise. While there’s certainly some diversification into commercial property and other asset classes from portfolio landlords, the buy-to-let market is here to stay, and we expect strong demand for finance to support these opportunities in 2024.
Richard Harrison, head of mortgages, Atom bank:
“The latest data demonstrates that, while the market may be challenging, this is still very much a softening of pricing rather than the property crash that some had predicted this year. We’ve seen Rightmove predict that prices will fall by an average of 1% next year. It’s important to remember that within this nationwide forecast there will obviously be regional differences, with some areas performing better than others, however the overall picture of a relatively flat market should entice more buyers early next year as they look to get ahead of any potential future increases.
“If you’re a buyer there is certainly reason to be positive, particularly given the competitive mortgage environment, with lenders continuing to cut rates, while improving criteria and service levels in order to win new business. This, alongside flatter pricing, should have a positive impact on buyer sentiment and as confidence improves, there’s a good chance that the market will exceed current expectations next year.”
Charles Breen, director at Wellingborough-based mortgage broker, Montgomery Financial:
“This data suggests a depressed property market whereas, in reality, activity levels and confidence are really starting to pick up. Enquires are up hugely compared to 12 months ago, valuations are coming back without issue, estate agents are more realistic in what they are listing houses for, inflation is coming down and the base rate may be cut sooner rather than later. Barring a major shock or the Bank of England being totally detached from reality, it’s looking like the foundations are being laid for a very strong year to come. The Land Registry data has a lag and is not a true gauge of current market conditions, so it’s a misleading barometer in some respects. I believe that the worst of the pain in the property market is now behind us and that the next 12 months and beyond will be quite strong.”
Bob Singh, founder at Uxbridge-based Chess Mortgages:
“This data still shows the fallout from the mini-Budget that sent the property market into a huge tailspin. However, 2024 is shaping up to be a better year for the property market as inflation continues to drop and the likelihood of a base rate cut earlier in 2024 increases. In recent months, property prices have been shored up due to strong demand and weak supply. Meanwhile, tenants have borne the brunt of some brutal rent rises as landlords have been forced to hike rents. With over a million cheap mortgage rates ending next year, we are still not out the woods but the prospect of a rate cut has brought some Xmas cheer to the markets.”
Darryl Dhoffer, director at Bedford-based mortgage broker, The Mortgage Expert:
“That was then and this is now. Over the past few months, demand has really started to pick up so the negative impression of the property market given by this data needs to be put into context. Mortgage rates are dropping on an almost daily basis, which is boosting demand among buyers, while supply is still scarce, which is providing a support to prices. We are heading into 2024 on a strong note after a very challenging 2023.”
Matthew Jackson, Director at Salisbury-based mortgage broker, Mint FS:
“As we head into Christmas, we may just be seeing the property market awake from its slumber. Over the past few months, there has been a lack of stock, as sellers have hesitated from listing their properties due to high mortgage rates, weak prices and a lack of demand as affordability is squeezed for many buyers due to the cost of living and stagnant wage rises. Renters have been hit as landlords are forced to increase rents as lenders profiteer from the market by charging exorbitant rates and fees to remortgage investment properties. In some cases, the fees are as high as 10% of the amount borrowed. Fortunately, there are now positive signs for 2024 with mortgage rates dropping, house prices remaining stable and the latest inflation figures promising a buoyant start to the new year.”
Steven Hargreaves, mortgage and protection adviser at Leeds-based broker, The Mortgage Co:
“We are seeing an increase in first-time buyer enquiries, which is very encouraging, especially in comparison to the previous 12 months. Increased confidence due to falling inflation and lower mortgage rates is having a material impact on first-time buyers returning to the market. Supply is still an issue, however, traditionally we do not have an influx of new properties to the market until early January. Hopefully, if estate agents can persuade their vendors to be realistic with asking prices in 2024, we expect a far more fluid and robust housing market in 2024, with first-time buyers and even landlords returning.”
Craig Fish, director at London-based broker, Lodestone Mortgages & Protection:
“London has once again seen the largest fall but then prices in the capital were a lot higher originally. Over the past couple of months, we have seen tentative signs of increased demand among first-time buyers and home movers, which bodes well for 2024. There has also been increased demand from landlords as rents are on the rise. These are only initial enquiries but it does seem to have come off the back of the positive signs that we are seeing with reducing mortgage rates and falling inflation. Prices still seem to be a little higher than buyers would like and this is being supported by the lack of stock. Next year could see a slight influx of property as some of those 1.4 million mortgage holders experience a level of rate shock that could force them to sell. This will undoubtedly have a further impact on prices, but with ever-decreasing mortgage rates, and almost certain base rate cuts next year, the property market looks set to emerge from its hibernation.”
Elliott Culley, director at Hayling Island-based broker, Switch Mortgage Finance:
“This data needs to be taken with a pinch of salt due to the time lag. The property market has picked up quite a bit in the usually quiet run-up to Christmas. Falling mortgage rates are igniting demand and seeing more activity overall. The latest inflation data has just increased the chances of a rate cut earlier in 2024 than had been expected, which will further boost demand and will likely see house prices steady and potentially start to creep up again throughout 2024.”
Graham Cox, founder at the Bristol-based broker, Self-Employed Mortgage Hub:
“This data reflects a time of the year when the market was under a lot more pressure. We’ve seen increased property demand since October, as mortgage rates have started falling quite significantly from their summer highs. The question now is will the UK enter recession in 2024? Or will it continue to flatline before growing again? If it’s the former, then house prices will continue to fall, perhaps by 5% over the year. But a soft landing is looking increasingly likely.”
Andrew Montlake, managing director at London-based broker, Coreco:
“The latest fall in inflation will bring some early Christmas cheer to policymakers and consumers alike. This will no doubt have an impact on SWAP rates, which in turn will allow mortgage lenders to continue to reduce their product offerings as the January mortgage sales look set to become even more intense.
“It also heaps further pressure on the Bank of England to cut the base rate sooner rather than later as they are in danger of looking out of touch with what is happening in the real world, especially those that voted for another rise only a few days ago. This also has implications for the property market as a whole and we could see prospective buyers return to the market in earnest early next year before increasing demand starts to put upward pressure on house prices again, especially in popular areas.”
