House Prices: ONS Records 1.2% Fall In Values But Cheaper Mortgages Fuel Optimism

Credit to: Forbes

20 December Update: Softening Interest Rates Sustain Buyer Interest

• House prices fell 1.2% in year to October 
• Price inflation dropping since July 2022
• Average UK house price £288,000

Average house prices dropped by 1.2% in the year to October, according to the latest government figures published by the Office for National Statistics (ONS).

Annual property price inflation has been gradually slowing since July 2022, when annual price inflation was at 13.8%. The ONS’ provisional estimate for the average UK house price was £288,000 for October 2023 – £3,000 lower than 12 months previously.

Regionally, Northern Ireland and the North East of England appear to have been among the more resilient markets. The average property price in Northern Ireland has increased by 2.1% to £180,000 in the year to quarter three of 2023 (July to September).

The North East was the only English region which saw an increase in average house prices in the 12 months to October 2023 (0.2%), although it is the region with the lowest average prices in England at £161,000. 

In contrast, London saw the largest fall with a drop of 3.6% for the same period. Average prices in London are the highest of any UK region and were recorded at £516,000 in October.

Kevin Roberts, managing director at Legal & General mortgage services, said: “House prices have ended the year on a stronger footing and the outlook for pricing is much more optimistic now compared to this time last year, when doomsayers were predicting a drop of around 10%. 

“In reality, the fall has been around half that, or less in some regional cities like Bristol, where roughly two-thirds of properties on the market in certain postcodes are currently under offer. 

“House prices are very closely linked to interest rates, which have settled considerably as the year has gone on. Usually we would see a quieter few weeks in the immediate run-up to Christmas, but buyers have surprised us by remaining active.”

Nathan Emerson, chief executive at estate agency trade body Propertymark, said: “Throughout 2023 higher interest rates have affected mortgage affordability, which has been a contributing reason why prices have dropped. 

“Our latest Housing Insight Report found that there has been a 13% decrease in the number of potential homebuyers registered at each member branch. But interest rates will likely fall in the long-term, reducing borrowing costs for homeowners, and we should finally see market confidence return to what it was prior to the pandemic.”