House prices fell for the second month in a row in October, according to official figures.
House prices fell 1.2 per cent in the 12 months to October, the latest data from the Office for National Statistics (ONS) shows.
It means the average UK home was worth £288,000, which was £3,000 lower than 12 months previously.
But thanks to the house price boom during the pandemic the typical home remains £58,000 more expensive (25 per cent) than in April 2020.
The average UK house is estimated to be £288,000 in October 2023, which was £3,000 lower than 12 months ago
But the pace of house price growth has been dramatically slowing since July last year, when annual prices rose at a rate of 13.8 per cent.
Anthony Codling, head of European housing and building materials for investment bank RBC Capital Markets said: ‘The fact that average UK house prices in October 2023 have only fallen by £3,000 or 1.2 per cent in one year is testament to just how robust the UK housing market is.
‘In the aftermath of last year’s mini budget few, if any, commentators were suggesting a fall of just £3,000 in the coming year.’
The ONS house price index uses Land Registry data and is based on the average sold price of the average property.
However, property transactions often take months to complete, meaning it does not necessarily reflect what is happening in the housing market right now.
Separate house price indices from Nationwide and Halifax (which track the value of their mortgage transactions) report that house prices have risen over the past two months.
However, Rightmove, which tracks newly listed asking prices, says asking prices fell 1.9 per cent this month, following a 1.7 per cent fall in November.
Jeremy Leaf, north London estate agent and a former Rics residential chairman, said: ‘The ONS house price index is the most comprehensive of all the housing market surveys as it includes not just mortgaged properties but also increasingly popular cash purchases, is particularly interesting.
‘The figures confirm the greater resilience in evidence for the past few months in the usually distracting period leading up to Christmas.
‘Buyers and sellers are taking heart from the pause in interest rate rises and falls in mortgage payments and inflation, as well as continuing strong employment.
‘Looking forward, the signs for the new year are more promising than they may have been only a few short months ago.’
London sees biggest house price falls
House prices have behaved differently across the country.
In London, house prices fell by 3.6 per cent in the 12 months to October, while in the North East average prices actually rose by 0.2 per cent during that period.
Regional variance: In London, house prices fell by 3.6% in the 12 months to October while in the North East average prices actually rose by 0.2% during that period
Looking ahead to next year, some are arguing there is cause for optimism for home buyers movers and sellers.
Mortgage rates have been heading downwards in recent months with the best rates available now almost 1 percentage point lower than the Bank of England base rate, which is at 5.25 per cent.
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Tomer Aboody, director of property lender MT Finance, says: ‘As we near the end of the year, more confidence is coming through and with interest rates on hold, combined with another fall in inflation, we should see a better and stronger market in 2024.
‘With the Government desperate for some positive news, a restructure of stamp duty may also be on the cards to further bolster positivity and activity.’
Past the peak? Average fixed mortgage rates appear to be falling back somewhat after a barrage of rate hikes during the first half of the year
‘Stability is on the horizon, with different measurements for house prices indicating a tapering off in house price volatility,’ said Iain McKenzie, chief executive of The Guild of Property Professionals.
‘This is good news for homeowners, who have faced uncertainty all year about the value of their property and when the best time to sell is.
‘First-time buyers will have been hoping for a greater adjustment in prices than just a £3,000 fall in the previous 12 months, as that does not put levels anywhere close to what the picture was like pre-pandemic.
‘An important factor to bear in mind is that we have not seen as much of a drop-off in property transactions as there has been in other periods of economic difficulty. This demand has kept prices from facing a landslide in the last year.
‘It is likely that the coming months will continue the trend of modest falls, but with inflation coming down at a faster rate than expected, we are hopeful that this will eventually bring more confidence back to the market, and more lenders will loosen the purse strings.’
The ONS says that recently, the transaction volumes available to calculate the house price index have been considerably lower than in the past.
It warned that revisions may be larger than usual over the coming months.
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