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UK house prices suffer first monthly decline since 2021

Written by: Shekina Tuahene
Average UK house prices fell 0.3% in the month to £294,910 in November last year, the first time a monthly decline has been recorded since October 2021.

According to the Office for National Statistics (ONS), on an annual basis, house prices rose 10.3%. This compared to growth of 12.4% in the year to October 2022 and 9.8% in the year to September. 

In England, average house prices increased 10.9% year-on-year to £315,073. This was 0.2% lower than the average price of a house in England in November. 

House prices rose 10.7% annually in Northern Ireland to £176,131, while Scotland recorded a 5.5% yearly jump to £191,492. In Wales, average house prices went up 10.7% to £220,366. 

The region with the lowest annual growth was Scotland. 

The North West reported the strongest growth in average house prices, with a 13.5% uplift bringing values to £221,224. This was followed by the West Midlands where prices increased by 12.3% to £256,937 and the East Midlands where prices rose by 12.2% to £253,498. 

Cash buyers propping up the market 

Cash buyers paid 9.7% more for their homes on average compared to last year, with a typical value of £279,138. This was a monthly decline of 0.4%. Buyers using a mortgage paid 10.5% more for their home compared to this time last year, with values coming to £307,887. This was a 0.3% drop on the previous month.  

Nicky Stevenson, managing director at Fine and Country, said the annual growth in house prices might look surprising but unlike other indices, the ONS took cash buyers into account. 

She said: “The prime market in particular is still buoyant, especially among cash buyers, and this may be a factor in keeping prices at this level. 

“There are other reasons for optimism. Interest rates in November were still very high following the mini Budget, but they are now declining and there is a much better choice of mortgages available. 

“Equally, it is encouraging to see inflation slowing, which will revitalise the aspirations of home movers and first-time buyers who will be motivated by falling rates and the possibility of securing a good deal on their home.” 

Property type and buyer 

The average price of a terraced house increased 12% to £242,533, which was the strongest growth for all property types. Flats and maisonettes saw the smallest rise of 5.7% to £232,762. 

First-time buyers and former homeowners each paid 10.3% more for their homes on average when compared to last year, with prices rising to £245,522 and £345,576 respectively. 

On a monthly basis, first-time buyers saw property values drop by 0.4% and former owner occupiers saw a 0.3% reduction. 

Market still standing strong 

Despite house prices falling, property market experts noted that values were still high. 

Jason Ferrando, CEO of EasyMoney, said it was “ill-advised” to judge the health of the property market on a short-term measure. He said despite November seeing the first monthly decline in prices, property values were still close to their highest point seen during the pandemic. 

Iain Crawford, CEO of Alliance Fund, added: “The current outlook for the housing market is far more positive than it was just a few short months ago and while we continue to tread with some degree of caution, the general consensus is that the year ahead will bring greater stability. 

“With this in mind, the marginal monthly decline seen between October and November is likely to be short lived and is almost certainly being influenced by the seasonal slowdown approaching the festive season.” 

A return in activity 

Others said the dip in house prices did not indicate a decline in activity. 

Sharon Hewitt, managing director at Chiltern Relocation, said: “Prices may be nudging down but we are not witnessing the sharp slowdown many predicted. On the contrary, we have received more enquiries at the start of the year than last year and speaking to estate agents daily, they happily report a strong start to the year with higher viewings levels than they expected.” 

Meanwhile, Jamie Lennox, director at Dimora Mortgages, said the start of the year had been “more buoyant than first expected”.  

He added: “The realisation for many that rates aren’t going back down to one per cent any time soon has set in and many people are now deciding to just commit to the idea and take the cards they are dealt with mortgage rates. There is a sense that the potential damage to the housing market may be limited with mortgage rates reducing.  

“However, this does not change the fact there will still be a percentage of people who will be forced to sell their houses from spring onwards when these higher rates start to kick in and I don’t think we will start to see the true extent of the house price reduction until towards the end of the year.”

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