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UK house prices see largest fall since 2011

UK house prices see largest fall since 2011
Anna Sagar
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Anna Sagar

Average UK house prices fell by 2.1% in the year to November 2023 coming to an average of £285,000, figures show.

According to the latest figures from the ONS, this compares to a 1.3% fall in the 12 months to October 2023 and is the largest annual fall in house prices since 2011. The report added that the average house price of £285,000 was £6,000 lower than 12 months ago.

The ONS added that on a seasonally-adjusted basis, the average UK house price decreased by 0.4% in November 2023, which came after a month-on-month decrease of 0.3% in October 2023.

On a non-seasonally adjusted basis, the average UK house price decreased by 0.8% in November 2023, following a month-on-month decrease of 0.6% in October 2023.

Regional differences: England reports largest drop in house prices

Looking at different regions, the average house price, which came to £302,000 in England, decreased by 2.9% over the 12 months to November. This is a decrease from a fall of 1.7% in the 12 months to October and is the largest fall since 2009.

All English regions saw an annual house price fall with the largest decreases recording in London, the South West and The West Midlands at negative six per cent, negative 4.1% and 3.4% respectively. The North East had the lowest annual price fall at minus 0.4%.

In Scotland, the average house price rose by 2.2% over the same period, up from 0.5% rise in October. The average house price stood at £104,000.

Wales’ average house price fell by 2.4% in the 12 months to November 2023, up from a 3.3% fall in October. The average house price in Wales came to £213,000.

In Northern Ireland the average house price rose by 2.1%, with the average house price at £180,000.

Housing market has a ‘much more positive picture now’

Tony Hall, head of business development, Saffron for Intermediaries, said that it was important to remember that the data was from November and in an “ever-changing market”, two months was a “long time”.

He continued that the market was “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,” Hall explained.

However, he said that in the evolving market, it was important for borrowers to have “advisers…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,” he said.

Emma Cox, managing director of real estate at Shawbrook, said that a “drop off in buying activity in the lead up to Christmas coupled with tough market conditions contributed to a further fall in November”.

She continued: “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.”

Cox added that professional landlords thrive in an environment with “stable interest rates and inflation, empowering them to strategically navigate property investment”.

“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,” she noted.

Nathan Emerson CEO of Propertymark said that a drop in house prices is “inevitable and natural when finding a balance in affordability during turbulent economic times”.

He continued: “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.”