The UK housing market has witnessed its first annual drop in house prices since April 2012, as reported by the Office for National Statistics (ONS). The average house price across the UK decreased by 0.1% in the year leading up to September, marking a significant shift in the market trend. Prices saw a dip from late last year, reaching a low in March 2023, followed by a rise until September, when prices again fell by 0.5%. The average house price now stands at £291,000.
This change in house prices varied across regions, with the North East experiencing a rise of 1.6% while the South West saw a decline of the same magnitude. London had the highest average price at £537,000, but it too experienced a decrease of 1.1% over the year. Interestingly, all property types, except for detached houses which saw an increase of 0.6%, have declined in price, with terraced houses being the hardest hit, dropping by 1.5%.
Sarah Coles, head of personal finance at Hargreaves Lansdown, commented on the market shift: “The long-awaited drop in house prices has finally materialised… The market has proved incredibly resilient in the face of overwhelming headwinds, but mortgage rate hikes over the summer dealt the final blow, pushing prices into negative territory.”
Gareth Atkins, Managing Director of Lettings at Foxtons, noted a typical decrease in renter registrations in October in London but expressed optimism due to a 12% increase in rental instructions, indicating landlords’ confidence in the city’s enduring appeal.
Sarah Tonkinson, Managing Director of Institutional PRS and Build to Rent at Foxtons, observed that the London lettings market is aligning with regular seasonal trends, with demand in Q4 decreasing. She emphasized the importance of correct pricing for quick property letting.
Jonathan Samuels, CEO of Octane Capital, pointed out the potential positive impact of the lowest inflation in two years on the property market, which has been showing resilience.
Verona Frankish, CEO of Yopa, highlighted the stabilizing effect of a freeze on interest rates and the anticipatory impact of a potential new stamp duty incentive on the market.
Marc von Grundherr, Director of Benham and Reeves, expressed a positive outlook for the property market in 2024, emphasizing the importance of stability in interest rates and falling inflation.
Chris Hodgkinson, Managing Director of House Buyer Bureau, suggested that the property market is moving in a positive direction, which could reassure sellers and increase buyer activity.
Tom Francis, Residential Director at Woods Hardwick, noted the static nature of the property market over the last year and the continued strong performance of new-build properties, which could reassure housebuilders despite uncertain economic times. He also speculated on the impact of a new stamp duty incentive on buyer activity and house price growth.
ONS House price data for August was released today: UK House Price Index – Office for National Statistics (ons.gov.uk)