Average house prices decreased by 2.1% in the 12 months to November 2023 (provisional estimate), down from a decrease of 1.3% in the 12 months to October 2023, according to the latest ONS House Price Index.
The average house price was £285,000 in November 2023, which was £6,000 lower than 12 months ago.
Average house prices over the 12 months to November 2023 decreased in England to £302,000 (negative 2.9%), decreased in Wales to £213,000 (negative 2.4%), but increased in Scotland to £194,000 (2.2%).
In addition, average house prices increased by 2.1% to £180,000 in the year to Q3 (July to September) 2023 in Northern Ireland.
The North East was the English region that saw the smallest decrease in average house prices during this period (negative 0.4%), while London saw the largest fall (negative 6.0%).
Reaction
Ross McMillan, owner at Glasgow-based Blue Fish Mortgage Solutions:
“Scotland, as this data once again shows, is proving the exception to the rule. Sentiment reigns supreme in the housing market and in Scotland it’s very positive at present. Whilst a modest uptick in inflation may create a degree of uncertainty, it’s crucial to recognise that buyer enthusiasm and activity have experienced a noticeable revival in the opening weeks of 2024. There’s a palpable energy in the air, suggesting a sustained demand that shows no signs of waning in the near future. The upshot of this, specifically in Scotland, is that already stubbornly robust house prices are likely to show further steady growth throughout 2024 rather than any sharp falls.”
Stephen Perkins, managing director at Norwich-based Yellow Brick Mortgages:
“That was then and this is now. And while inflation edged up slightly in December, sentiment now is considerably more upbeat than during the summer and Autumn of last year. It is unlikely that Wednesday’s slight increase in inflation will shake borrowers’ confidence in the housing market. There has been a bright start to the property market in 2024 and the blip in inflation will not halt that momentum.”
Andrew Montlake, managing director at UK-wide broker Coreco:
“House prices continue to bump along the bottom and given the time lag in this data the weak headline number comes as no surprise. If the start of the year is anything to go by, demand for housing is still on the rise, and as long as mortgage rates do not increase once more we can expect to see a continuation of small price falls with improvements later in the year. This will be location dependent as high demand areas will see stronger house price stability than others.
“Whilst today’s small rise in inflation is a stark reminder that nothing can be taken for granted, it should be viewed as a metaphorical speed bump rather than a fundamental change of direction. Those in the mortgage market will be watching SWAP rates closely and it could mean a slight pause to the New Year rate wars we have seen, but competition between lenders is unlikely to wane. It is a timely reminder that it is a fools’ folly to try to play the market and locking into a rate early is a safer play for many.”
Gary Bush, financial adviser at the Potters Bar-based MortgageShop.com:
“This data was always on the cards after the turbulence and subdued activity we say in 2023. Let us hope that the Bank of England won’t throw the baby out with the bathwater and react with a knee-jerk reaction to the marginal uptick in inflation last month. Having seen good increases in mortgage enquiries in 2024 so far, for both first-time buyers and homemovers, the inflation data is unlikely to wipe out the positivity for now. The property market will be largely unaffected by the small blip in inflation during December.”
Darryl Dhoffer, director at Bedford-based The Mortgage Expert:
“House prices will be under scrutiny following this morning’s inflation data but a slight uptick in December to 4% shouldn’t wobble the property boat too much. The lag in the Land Registry data has once again resulted in underwhelming house price numbers but we believe the market will hold firm as we head deeper into the first quarter of 2024. Mortgage rates are still far more competitive than they have been for some time, which will appeal to borrowers. My advice for borrowers and would-be home buyers is don’t hold off from securing a mortgage deal in the expectation of further cuts, as the mortgage arena will have ups and downs for sure as we coast through 2024.”
Justin Moy, managing director at Chelmsford-based EHF Mortgages:
“A lot has changed since the conditions that shaped this data. There is now a lot more positivity around property, which should translate into future Land Registry house price reports. However, if interest rate cuts are jilted by the inflation data, that might just take the edge off expected property purchase activity, and slow momentum accordingly. Do lenders hold back or continue cutting but on potentially smaller margins for the greater good of the property market long term? That is the big question right now and we are all watching on.”
Graham Cox, founder at Self Employed Mortgage Hub:
“A lot is being read into the jump in the inflation rate to 4.0%, but it’s entirely possible this is a minor bump in the road, and the rate of price increases will continue to fall towards the two percent target. If that happens, I think house prices will slowly drift down by about 5% in 2024. However, there’s still great uncertainty around events in the Middle East, and to a lesser extent Ukraine. Escalations in either of these arenas could see inflation rise and interest rates stay higher for longer.”
Arjan Verbeek, CEO of Perenna:
“Although house prices have fallen, the market remains challenging for aspiring homeowners. While some mortgage providers have made attempts to attract new buyers by offering low short-term fixed rates, these will not improve affordability or peace of mind for consumers in the long-term.
“The UK’s reliance on short-term fixes is part of the problem, due to how risk affordability is calculated by lenders. If the risk is mitigated away from borrowers, and lenders know what homeowners will continually pay in 10, 15, or even 20 years, it could open up affordability significantly and allow many more to buy a home. It’s why long-term fixed rate mortgages are being seriously considered and discussed by both Labour and Conservatives ahead of the next general election – to allow more individuals to buy with smaller deposits. European counterparts such as Germany, France, and the Netherlands rely on mortgage banking models which are long-term and fairly priced. It’s a proven model.
“The market remains volatile; quick-fix, short-term solutions aren’t the answer. A truly affordable UK market requires structural change and a revolution.”
Gareth Lewis, managing director of property lender MT Finance:
“While there is a suppression in transactional volumes, there are going to be decreases in values as when a property goes on the market there isn’t an influx of people desperate to buy it. It is more of a buyers’ market because there isn’t a plethora of buyers and that is being reflected in these numbers.
“The market is just bumbling along, with no hugely noticeable decreases in values. The largest falls are in the southeast because in reality those properties are more likely to have been overpriced and probably still are. If people are looking to buy property as an investment, they will go where there is a return on yield and choose areas which fit affordability from a buy-to-let perspective.
“Until we see more people wanting to transact and buy properties, the market is likely to bumble along without too much movement either way.”
Nathan Emerson, CEO Propertymark:
“A drop in house prices is inevitable and natural when finding a balance in affordability during turbulent economic times.
“We want to see affordability further improve for homeowners and in order to achieve that, inflation rates will need to get closer to the government’s two per cent target, which in turn will impact the Bank of England’s ability to begin reducing interest rates from February onwards.
“We would also hope the UK Government looks at options to increase housing supply in a market in order to keep up with growing demand.”
Tony Hall, head of business development, Saffron for Intermediaries:
“When looking at today’s ONS house price index, it is important to remember that it represents data from November 2023.
“In an ever changing market, two months is a long time, and we are seeing a much more positive picture now than this data suggests.
“Less volatile swap rates and a measured approach to the base rate from the Bank of England is encouraging competition among mortgage lenders and driving prices down.
“This in turn is encouraging aspiring homeowners and movers into action and driving market activity. Rising confidence has already been reflected in recent Rightmove data, which suggests that average house prices have gone up this month too.
“That being said, as borrowers look to navigate the evolving market, it is important that advisers are on hand to guide them.
“Many will be looking to their adviser for reassurance and support, and it is important for industry professionals to ensure that everyone is able to find the best possible deal tailored to their individual needs.”
Emma Cox, MD of real estate at Shawbrook:
“A drop off in buying activity in the lead up to Christmas coupled with tough market conditions contributed to a further fall in November.
“Whilst this means December’s figures could also decline, the outlook for 2024 is looking more positive. Interest rates are likely to drop or at least hold, and a reduction in mortgage rates should fuel new buying activity.
“Professional landlords thrive in an environment marked by stable interest rates and inflation, empowering them to strategically navigate property investments. A steady economic backdrop ensures property values remain consistent, instilling market confidence and providing landlords with a robust foundation for long-term planning and growth. This, in turn, may contribute to an increased availability of rental properties to meet the sustained high demand in the market.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“The downwards rate war continues to pick up momentum although there is no guarantee that mortgage rates will keep tumbling. There are bound to be blips as it is still quite volatile out there as today’s inflation figures suggest.
“Swap rates, which underpin the pricing of fixed-rate mortgages, have been falling over the past month but ticked up today on the back of the inflation data, with five-year Swaps rising to 3.69 per cent from 3.54 per cent yesterday.
“While the rate trajectory is on the whole downwards, borrowers need to be mindful that if they like the look of a rate it might not be around for long so they should speak to a whole-of-market broker and secure it sooner rather than later.”
Alex Lyle, director of Richmond estate agency Antony Roberts:
“These numbers are quite dated, underlining a more subdued market before Christmas.
“Since the start of this year, sentiment has improved hugely, largely encouraged by what is happening with mortgage rates.”Buyers are more committed than they were towards the end of last year but are still being cautious. They remain very price sensitive but there is a degree of confidence that this year will be better for the market than 2023.”
Alan Davison, director of customer sales at Together:
“Lower prices today further signal a lack in strength and confidence across the property market continues after a sluggish 2023.
“For the most part, buyer’s spending power is still limited. And, with the Bank of England under big pressure to act and cut its key lending rate, there could be increased support for borrowers and their property ambitions this year. A key driver behind whether this happens or not will depend on whether inflation reduces further.
“Indeed, both residential and commercial property buyers will have a keen eye on market fluctuations this week and be busily weighing up whether to make a move now or keep cautious and hold for further assurance that the market will retain buoyancy.”
Malcolm Webb, FRICS, technical director at Legal & General Surveying Service:
“The mortgage market is kicking off the new year with some healthy competition, making it a really exciting time to work in this space. Average mortgage rates on two- and five-year fixed-rate deals have fallen for a fifth consecutive month, with many of Britain’s biggest banks currently offering a 5-year fix below 4%.
“Alongside rates dropping, mortgage product availability is also heading upwards, and you currently have over 2,200 more options to pick from than you did in January last year. The shelf life of these products – i.e. how long they are on the market – has also improved dramatically. First-time buyers will also be pleased to hear that the availability of 5% deposit products has also risen to the highest level since September 2022.
“There’s every hope this will spark renewed interest from buyers to boost transactions, and help solidify house prices. The average UK house price is very comparable to this point last year, but there are huge regional variations to consider, so it’s always worth doing your homework on your particular area to understand the trends.
“With changes to mortgage pricing, affordability, and criteria, all coming thick and fast, it’s a good time to consult a qualified mortgage adviser before opening your purse or wallet. Advisers are trained to understand all the complexities of the fast-moving market, and guide you towards the best solution for your situation and needs. Buying a home is often the largest financial commitment you will make in your life, so it’s vital that you have an expert by your side during the process.”
Jason Ferrando, CEO of easyMoney:
“A slight seasonal reduction in sold prices is unlikely to dent the improving market sentiment that we’ve seen develop in recent months and there’s no doubt that buyers are returning buoyed by a freeze on interest rates.
“However, they are advised to do so with a degree of caution. While mortgage rates are reducing, swap rates have been creeping up in January which suggests that this reduced level of mortgage affordability may not hang around for long.
“Those looking to buy are best not to overborrow as this could cause them financial difficulty further down the line when they come to renew.”
Ruth Beeton, co-founder of Home Sale Pack:
“Despite today’s reduction in house prices, market conditions have certainly improved and an increase in mortgage approvals suggests more buyers are now returning to tentatively dip their toe, even though interest rates remain at their highest since 2008.
“While this uplift in market activity is, of course, a positive for the nation’s sellers, the current market landscape remains a challenging one and transaction timelines are still significantly longer than we’ve seen previously.
“Proactive sellers stand the best chance of securing a buyer and progressing their sale at speed and this involves getting your house in order from the very start when it comes to the paperwork required, as well as taking a realistic approach during the negotiation phase based on today’s market values.”
Jason Harris-Cohen, CEO of Open Property Group:
“The market has stood fairly firm over the last year despite wider economic turbulence, but we’re yet to see any improvement in property values and it may be some time before we do.
“Higher interest rates are still dampening buyer sentiment and not only is it taking far longer for sellers to secure a buyer in a proceedable position, but the path to completion is also taking considerably longer.
“So while home sellers entering the market may still secure a good price, those looking to sell their home quickly are likely to be disappointed.”
Colby Short, co-founder and CEO of GetAgent.co.uk:
“Although we may have seen an uplift in front end market activity in the run up to Christmas, both in the form of mortgage approvals and mortgage approved house prices, this growing positivity is yet to filter through to actual sold prices.
“Of course, it’s only a matter of time before it does and so while a seasonally influenced drop in property values may seem like bad news, we fully expect this trend to reverse as the market gets back up to speed in 2024.”
Verona Frankish, CEO of Yopa:
“Sold prices are always the last indicator of market health to show improvement and so while they remain down, this certainly isn’t a sign of an impending market crash, more the final days of a previous period of stagnation.
“In fact, we’ve already seen evidence that the market is starting to improve and not only are buyers returning, but we’ve seen thousands of sellers return to the market already this year who previously failed to secure a buyer in 2023.
“With momentum building on both sides, it won’t be long before this uplift in activity helps to push sold prices in the right direction.”
Marc von Grundherr, director of Benham and Reeves:
“There’s been an air of positivity hanging over the UK property market for a number of months now and this is unlikely to evaporate due to a marginal decline in sold prices.
“Not only is there a seasonal influence at play with today’s figures, but what we’re seeing is a return to the norm following a pandemic inspired period of house price boom.
“The market is currently finding its feet as buyers adjust to the reality of higher mortgage rates, while sellers are also having to adjust their expectations and as the two meet in the middle, we expect the market to stabilise.”
Matt Surridge, sales director at MPowered Mortgages:
“Today’s figures reflect the higher borrowing costs and the cost-of-living crisis, which deterred buyers in the second half of 2023. However, as we enter the new year, the outlook is decidedly more optimistic than before. Thanks to less volatile swap rates and more stable interest rates, the market thoroughly favours buyers—a welcome change for those looking to purchase and something which should drive activity.
“That being said, we still expect house prices to stay on a gradual downward trend over the coming months due to elevated interest rates and stretched affordability. For brokers, the task now will be to help borrowers do thorough research, and ensure they are only making commitments they can afford over the long-term. Buying a house is one of the most important financial decisions many borrowers will make in their lifetime, and brokers must use their experience to help bring perspective to the situation to prevent any rash decisions from being made.
“In a challenging market, MPowered’s AI-powered solutions are specifically designed to help make the mortgage process as streamlined as possible, giving control back to consumers, and ensuring they have the very best chance of finding a product that works for them.”
Karen Noye, mortgage expert at Quilter:
“The latest government house price index reveals prices saw a 0.8% drop in November compared to the month prior, and an annual price fall of 2.1% drop in the 12 months to November. This leaves the average property in the UK valued at £285,000.
“This annual decrease of 2.1% is a notable uptick compared to the 1.3% decrease seen in the 12 months to October, suggesting house prices have been further worn down by the challenging economic circumstances. However, it is worth noting that though it can be a difficult to get an accurate picture of how the housing market is faring, house price indices from lenders such as Halifax, which provide a more up to date view of the market, have painted a considerably more positive picture in recent weeks.
“Last year was incredibly challenging for the housing market, and cost of living pressures and high interest rates saw a marked decrease in the number of property transactions which had a knock-on effect on house prices. Though this morning’s data points to a downturn in prices, the housing market still appears to have coped relatively well overall given this is a far smaller fall than had been predicted in the wake of the Truss mini budget.
“There is a now sense that the property and mortgage markets have come through the worst of the turmoil of the past few years and as we look ahead to the rest of 2024, cautious optimism remains. Lenders have been consistently reducing their mortgage rates as swap rates have lowered, and reduced transaction levels have fed into a healthy competition between lenders which have been left battling for business.
“In the coming months, we may see more prospective buyers lured back to the market which could buoy prices, particularly if mortgage rates continue to fall. The surprise uptick in inflation this morning may mean the Bank of England maintains its ‘higher for longer’ stance for a little while longer, but rate cuts are widely expected to materialise as we move further into 2024 and those looking to secure a fixed rate mortgage could find that deals become increasingly more palatable. However, those with long term deals from the period of very low interest rates ending this year will find they are still faced with a considerable jump in their payments. Those looking to remortgage or purchase a new home this year would benefit from seeking professional mortgage advice to ensure they are making the best possible decisions for their personal circumstances.”
Richard Harrison, head of mortgages, Atom bank:
“On the face of it, an annual drop of 2.1% paints a gloomy picture for the market, however there may be a slight lag compared to other house price indicators which are leaning towards a more positive outlook. Earlier this week, Rightmove indicated that the property market is gathering momentum, with average asking prices at the start of the year increasing at the highest rate since 2020, while the number of sales agreed was 20% higher during the first week of January than the same period last year.
“The start of the year has seen a so-called price war, with many lenders making significant rate cuts to win business. Cheaper mortgages will no doubt encourage buyers to see what’s out there, which should help to underpin property prices. If this demand helps to attract new vendors, the return to greater liquidity will be more good news for the economy and should build a growing sense of confidence as we move towards an election later this year.”
