Average house prices in the UK fell by 1.2% annually in October to £287,782, government data has revealed.
The Office for National Statistics (ONS) house price index showed this was a sharper annual decline than the 0.1% drop recorded in September, which was also the first yearly fall seen in more than a decade.
On a monthly basis, average house prices fell by 0.7%.
UK house prices were £3,000 lower than a year ago in October, but £7,000 higher than a recent low recorded in March this year.
No sharp decline
While house price growth has cooled, the market avoided a crash and was starting to level out.
Emma Cox, MD of real estate at Shawbrook Bank said: “Another drop in October probably signifies the beginning of the expected cooling of house ices starting to filter through, but I’m not expecting a sharp decline.
“The shortage of available homes on the market is contributing to the relative resilience of house prices.”
Jonathan Hopper, CEO of Garrington Property Finders, said the drop was “far from the plunge that some were predicting at this time last year, but months of price reductions on the property front line have finally fed through”.
He added: “Even though some of the forward-looking house price indices already suggest asking prices are starting to rise again, the lag in the way the ONS collects its data means it’s likely to show further falls in coming months.
“As a result, 2023 is firmly on course to be the first year in more than a decade to see a fall in the average price paid for a home.”
Hopper said: “While the worst of the price correction is probably behind us, things aren’t back to normal yet. The market is still slow, and the number of homes changing hands in October was down over a fifth compared to the same month last year.
“Nevertheless, the early signs for 2024 are encouraging. Softening interest rates, coupled with the sense that prices have bottomed out, are bringing would-be buyers out of the woodwork.”
Nick Leeming, chairman of Jackson-Stops, said with house price predictions of a 5% annual decline, the “minimal drop of just 1% is the clearest example of the property markets enduring strength despite riding the real estate rollercoaster”.
He said looking forward, predicting the market would be like “trying to read a ‘mortgage mosaic’” as it would be a “picture made of many different, tiny pieces, often driven by regional and economic nuance”.
However, Leeming said: “What we expect to see is a minor reduction in property values overall next year, but no great dips as we have seen from 2023 the strength that underpins our bricks and mortar.”
House prices up in North East and Wales
The North East was the only region in England to report an annual rise in house prices with a 0.2% growth to £161,237. On a monthly basis, house price growth was flat at 0%.
London saw the largest yearly change in average house prices with a 3.6% decline to £515,504. This was followed by the East of England where values fell by 2.3% to £348,615.
Across the country, England reported a 1.4% annual decline to £305,902.
In Wales, average house prices fell by 3% year-on-year to £214,100, while in Scotland there was a 0.2% increase to £191,233.
Average house prices in Northern Ireland rose by 2.1% annually to £179,530.
Flat house price growth for detached homes
The value of detached houses was flat compared to last year at £457,222, while flats and maisonettes saw the sharpest decline of 2.5% to £225,803.
The average price of terraced homes dropped by 2% year-on-year to £234,553, while semi-detached houses fell by 0.3% to £281,658.
The average price of new-build homes shot up by 20.6% yearly to £430,202, which equated to a 10.5% monthly jump in October.
The value of existing resold homes fell by 0.5% to £284,036 against last year, with a 1% monthly uptick.
On average, first-time buyers paid 1.6% less for their homes at a value of £238,804. This was down by 0.9% compared to the previous month.
Former owner occupiers saw a 1% annual decline in the price they paid for a home at £337,513, which was a 0.6% fall on September.
