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House Prices Experience Minimal Growth, Predicting a Challenging Road Ahead

Recent data indicates a deceleration in the UK’s house price growth, with a mere 0.2% increase recorded in the year to August, a notable decline from the 0.7% witnessed a month prior. This slowdown signals potentially challenging times ahead for the property market. The East of England, in particular, experienced the most significant price reductions this year, plummeting by 1.6%. Despite this, the average house price has managed to climb to £291,000, with a slight uptick of 0.3% within a month. However, the pace of these increases has notably slackened since the low witnessed in March 2023.

In a detailed regional analysis, London continues to boast the highest average price at £536,000, although this figure represents a 1.4% dip over the year. Property types have also seen varied fortunes; semi-detached homes have fared the best with a 0.9% increase, while terraced houses have suffered the most, declining by 0.9%.

Sarah Coles, the head of personal finance at Hargreaves Lansdown, commented on the situation: “The annual figures are going to look better over the coming months, reflecting the fact that we’re a year on from the mini budget. It had a dramatic impact on house prices, as the cost of mortgages soared, and house prices went from a peak of £291,909 in September – the month of the announcement – to a trough of £282,115 in March. It means that this September’s annual growth figure could look a bit wobbly, but from that point, annual price rises will be looking back to that period of lower prices, so they may look increasingly healthy.”

Emma Cox, Managing Director of Real Estate at Shawbrook Bank, observed, “Resilience continues to be the name of the game heading into the important final sales period of the year, with the ONS House Price Index showing that once again house price growth has remained stable in the face of significant economic challenges.”

In light of the mini budget’s aftermath, Guy Gittins, CEO of Foxtons, noted, “Positively, the shock of the mini budget felt this time last year seems to have largely dissipated, and buyer sentiment is holding up despite the challenging macroeconomic backdrop. But with higher interest rates largely priced in, sellers are having to be more competitive with their property pricing in order to stimulate buyer demand; this puts buyers in the driving seat when it comes to negotiations, but sellers that adjust their pricing accordingly are successfully transacting. At Foxtons, we’ve seen a higher volume of new sales agreed as a result.”

Meanwhile, Mobeen Akram, National New Homes Account Director at Mortgage Advice Bureau New Homes, remarked, “While we cannot deny that the market is challenging, it’s positive that we are seeing mortgage rates – and subsequently, house prices – stabilising. Even in the new build industry, we’ve seen a 3.9% decrease in house prices, which may encourage more homebuyers for 2024. The UK housing market continues to stay afloat and stable market performance is always a good thing, and this consistency indicates that it will continue to stand its ground as the year draws to a close.”

These insights from industry experts collectively point towards a period of stability and subdued growth, suggesting that both buyers and sellers may need to brace for a potentially demanding few months ahead in the property market.

ONS House price data for August was released today: UK House Price Index August 2023 – Office for National Statistics (