UK house prices have recorded a 0.5% increase in November, continuing the upward trend from October’s 1.2% rise.
The typical UK home now costs £283,615, approximately £1,300 more than last month. However, on an annual basis, property prices have seen a 1.0% drop.
Kim Kinnaird, director at Halifax Mortgages, said: “UK house prices rose for the second month in a row, up by 0.5% in November or £1,394 in cash terms, with the average house price now sitting at £283,615.
“Over the last year, despite the wider economic headwinds, property prices have held up better than expected, falling by a relatively modest 1.0% on an annual basis, and still some £40,000 above pre-pandemic levels.”
The property market’s resilience is primarily due to a lack of available properties, rather than an increase in buyer demand. Recent mortgage approval figures suggest a slight rise in market activities, likely due to improved affordability and slightly easing mortgage rates.
“The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand,” Kinnaird added.
Mark Harris, chief executive of mortgage broker SPF Private Clients, commented on the mortgage market’s evolving landscape. He said: “With 5-year Swaps dipping below 4%, taking them back to a little higher than they were this time last year, the direction of travel for fixed-rate mortgages continues to be downwards.
“Although borrowers need to get used to living in a higher-rate environment, with the days of sub-1% mortgages long gone, two- and 5-year fixes are now available from less than 4.5%, which is starting to feel more palatable.”
Alan Davison, personal finance distribution director at Together, pointed out the ongoing trend of slight house price rises. He highlighted that buyer demand remains subdued due to increased borrowing costs and affordability pressures. “Prospective home buyers and residential buy-to-let investors seem to be continuing a cautious approach,” he said, adding that the focus is now on the Bank of England’s next interest rate decision.
Nathan Emerson, CEO at Propertymark, concluded: “There is little hiding away from the fact 2023 has been a complex and challenging year for the housing market. The market has grappled with both high inflation and elevated interest rates and this unfavourable combination has brought a far more cautious approach from both buyers and sellers alike.
“Propertymark remains optimistic 2024 will bring a more positive outlook, with inflation hopefully continuing to drop and household earnings gathering greater momentum. However, we must remain vigilant, as recovery sometimes comes with unexpected challenges along the way.
“It’s important to realise that while some geographical areas are starting to gain traction once again, for an overall healthy property market it would be preferable to see this universally across the entire UK before we can be confidently reassured.”
Further reaction
William Page, head of global sales at global property consultants, IP Global:
“Though the shortage of properties available for sale is definitely propping up prices, in recent months we have seen a definitive shift in buyer behaviour. The first three quarters of 2023 were defined by hesitation but that has now passed and is being replaced with confidence.
“Concerns about major price drops have eased as people realise that, due to structural undersupply, a significant decrease in house prices is unlikely. Now is arguably a good window of opportunity to buy before competition increases for property purchases, potentially quite sharply in 2024.”
Ken James, director at London-based independent mortgage broker, Contractor Mortgage Services:
“That the South East has seen the biggest downward pressure in prices will come as no surprise given the heights average values hit in the region.
“The steady stream of mortgage rate cuts over the past few months has given the market an injection of confidence that was sorely needed. Money will never be as cheap as it was a couple of years ago but it’s getting cheaper and that’s stimulating buyers into action.
“We saw a marked increase in enquiries last month and that has continued into December. It’s a mixture of remortgage clients who are moving away from their existing lenders as better rates present themselves, and in the first-time buyer market, lower mortgage rates at higher loan-to-values are bringing them back to the table as they begin the hunt for their new home.
“To kickstart 2024, we need mortgage rates to stay consistently below 5%. If the Bank of England cuts the base rate in the first half of next year, the wheels of the property market will really start to turn again.”
Riz Malik, director at Southend-on-Sea-based independent mortgage broker, R3 Mortgages:
“The UK property market will always have an in-built resilience due to the lack of supply. If inflation continues to fall and there are no surprise upward adjustments in the base rate as the year comes to a close, 2024 might start off well, perhaps revitalising the housing market by late January, especially with recent fixed rate reductions.
“Many people who gave up trying to sell their property in 2023 are planning to try again in the new year. However, 2024 looks set to stay a buyers’ market overall, particularly in the first half of the year.”
Peter Dockar, chief commercial officer at fintech residential mortgage lender, Gen H:
“The lack of new housing stock and some tempering of mortage interest rates for buyers have undoubtedly propped up house prices for those set on buying right now.
“But with housing transactions well down against long-term averages, it’s clear many potential buyers are waiting it out in the hope that either house prices or interest rates will come down in the new year. But that’s a bold bet.”
Stephen Perkins, managing director at Norwich-based independent mortgager broker, Yellow Brick Mortgages:
“Though the recent spate of rate reductions from mortgage lenders has started the property market’s engine and defrosting process, further stimulus is needed to really get it moving. A rate cut next year would really boost confidence levels, but that depends on the direction of inflation. Let’s not forget that the cost of living crisis is ongoing and the economy is still on shaky ground.
“All eyes will be on the next Bank of England base rate decision on 14th December, which fortunately comes ahead of the next set of inflation data, so a hold decision is expected this month. The next Monetary Policy Committee meeting is not until February’s meeting, which should give some much-needed stability to the market.”
Justin Moy, managing director at Essex-based independent mortgage broker, EHF Mortgages:
“The rate cuts of the past few months have taken as much as 1.5% off the highest rates for most borrowers. The cumulative effect of all these rate cuts is now triggering people to act, especially first-time buyers. The sting of higher mortgage rates has been eased by the reduction in house prices.
“The stock of property for sale is still limited in a number of places, as landlords are not exiting the market as quickly as first suggested, alongside the usual issues with supply and demand seen for the last decade or so. If mortgage rates continue to slide throughout 2024, we should see fewer homeowners selling out of financial necessity, with the rate shock less significant than just a few months ago.”
Emma Jones, managing director at Frodsham-based independent mortgage broker, Whenthebanksaysno.co.uk:
“The mortgage rate war of the past two to three months is slowly injecting life into the property market. It’s starting to feel like we have turned a corner. If inflation continues to edge down and the base rate stays the same, 2024 is shaping up to be a far more promising year than 2023 for the UK property market. If we see a cut in the base rate next year, that could really give sentiment a boost.”
Ross McMillan, director at Glasgow-based independent mortgage broker, Blue Fish Mortgage Solutions:
“Ever-decreasing mortgage rates and falling inflation mean more aspiring buyers are officially giving up on hopes of a significant house price crash. First-time buyers, encouraged by the more favourable trend in mortgage rates, are actively planning their early 2024 purchases.
“One possible dampener is the looming General Election, which may see slower overall market activity and further exacerbate the lack of stock on the market. A combination of lower interest rates, many landlords exiting the market and pent-up demand has the potential to kick off the 2024 property market with a first-time buyer-fuelled bang. Whether the sparks are hot enough to ignite a broader market surge remains to be seen.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Of course, the shortage of stock is supporting house prices. There is no doubt either that recent falls in inflation and mortgage rates as well as the continuing strong employment figures have improved confidence in the market.
“The other point to bear in mind is that these figures don’t include the approximate 35 per cent of buyers who don’t need a mortgage and are negotiating hardest at present, taking advantage of their stronger bargaining position.
“Looking forward, we expect the market to continue to confound so-called ‘expert’ opinions of a larger decline but certainly no great increases either particularly bearing in mind the number of fixed-rate mortgages which are due to end next year.”
Karen Noye, mortgage expert at Quilter:
“New statistics on UK house prices suggest a market that’s cautiously threading its way towards stability. The 0.5% rise in November, as shown by Halifax this morning, is a small yet telling step in a market that has witnessed a modest annual downturn of 1% but could have suffered much more considering the economic backdrop. This slight increase, emerging amidst a tangle of economic uncertainties, points to a potential growing resilience within the housing sector although it is likely underpinned by a serious lack of housing stock.
“However, mortgage approvals, are on an upward trajectory, albeit at a measured pace. The Bank of England’s latest data reveals a budding increase in approvals, painting a picture of cautious optimism among potential homebuyers, despite the shifting changes in financial stability as a result of fixed rate deals still coming to an end for people and new much higher mortgage costs being realised.
“Yet, the wider narrative remains tinged with caution. The striking 21% year-on-year fall in residential transactions according to recent government stats is a stark reminder of the market’s current hesitance, revealing the public’s wait-and-see approach in the face of fluctuating house prices and mortgage costs.
“The push and pull of limited housing stock against high rental costs are nudging individuals towards homeownership. However, the shadows of steep mortgage rates and broader economic uncertainties are acting as a counterbalance, putting a stop to a more dynamic resurgence of the market after a long period of inactivity.
“As the months roll on, the housing market’s journey towards recovery will largely hinge on the evolving patterns of interest rates and the overarching economic climate. It all boils down to the interplay between supply and demand.”
