Property prices have slipped from their peak levels – but predictions of a dramatic drop haven’t materialised.
The latest official data from the Land Registry shows an annual fall of just 0.1%, with the average UK house price standing at £291,000 in September. This isn’t far off the all-time high recorded in November 2022, which was £293,000.
Here, Which? analyses what’s happening to house prices according to other indices including Nationwide, Halifax, and Rightmove, and explains what might come next.
How have house prices changed?
House prices have risen considerably in the last couple of years, with the pandemic and previous stamp duty holiday bringing about a more volatile market.
The Land Registry’s UK House Price Index is the most reliable barometer of what’s happening to house prices, as it’s based on actual property sales rather than asking prices. It works on a two-month lag, so the most recent figures are for September.
The Land Registry says the average price of a property in the UK dipped by only 0.1% between September 2022 and 2023.
In the 12 months prior, house price growth soared by about 14% – so there has been a marked slowdown in growth over the past year.
There is a gap of £98,000 between the average price paid by first-time buyers and those who are already on the housing ladder in England:
- First-time buyer: £257,000
- Home mover: £355,000
Average house prices over time
- Find out more: best mortgage rates – check how rates compare for first-time buyers, home movers, and those looking to remortgage
How do other house price indices compare?
As well as Land Registry data, there are several other property price indices that can indicate what’s going on with house prices.
The portal Rightmove provides the most up-to-date figures, but they’re based on asking prices set by sellers rather than confirmed sales. Nationwide and Halifax also publish their own monthly data, based on mortgage lending.
All three indices are currently reporting annual price drops – albeit by varying amounts – as shown in the table.
Nationwide’s latest index reveals house prices dropped 2% in the year to November. The building society’s chief economist says that while growth ‘remains weak’, November’s data showed ‘the strongest out-turn for nine months’.
Halifax said house price resilience is being fuelled by a low supply of homes for sale rather than an uplift in buyer demand.
- Find out more: best mortgage lenders
House price changes by region in September 2023
Price changes vary from region to region and country to country.
Land Registry data shows the majority recorded monthly price decreases for September, with Yorkshire & Humber (-2.4%) and the North East (-2%) experiencing the biggest rises.
The annual picture is also split, with England as a whole recording almost stagnant growth over the 12 months from September 2022 to 2023.
As shown in the table, the average price of a home in the North East is almost half the average in England.
Source: UK House Price Index, 15 November 2023. Monthly data is not available for N. Ireland, figures are released each quarter.
How many homes are being sold?
The property market boomed in 2021 as buyers rushed to take advantage of the temporary cut to stamp duty. This resulted in huge spikes in sales around the deadlines in June (when tax savings of up to £15,000 ended) and September (when savings of up to £2,500 ended).
The number of purchases each month has since calmed, and there has been a marked drop-off in 2023. The most recent data from HMRC shows that an estimated 90,920 transactions went through in October – a hefty drop of 17% compared to October 2022, and 2% lower than September 2023.
The graph below shows how numbers have fluctuated over the past three years.
- Find out more: the cost of selling a house
Has the property market been slowing down?
Demand from buyers has fallen over the past 12 months, which has caused the housing market to cool off. There have, however, been encouraging signs in recent months.
Estate agent trade body Propertymark reports that interest from prospective buyers – and sellers – is on the up.
The market, though, remains quieter than in previous years, and buyers hold the upper hand when negotiating a purchase price.
Zoopla says sellers are accepting discounts of £18,000 on average in order to agree a deal.
The biggest price cuts are coming in southern England. The average discount-to-asking price for sales is 6.1% in London and the South East – equating to £25,000 being shaved off the asking price.
Richard Donnell, executive director at Zoopla, said: ‘These are the best conditions for home buyers for some years, with more homes to choose from and with sellers more prepared to negotiate on price to agree a sale.’
Rightmove says sellers are taking an average of 62 days to secure a buyer. That’s a significant increase from the 40 days recorded back in October last year.
- Find out more: why isn’t my house selling?
How long does it take to sell a property?
What will happen to house prices?
This year, the cost of living crisis and high mortgage rates are affecting the number of homes being sold.
Experts predict house prices will fall, but there are varying forecasts when it comes to the extent of this fall. The estate agency Knight Frank forecasts that prices will drop by 5% in 2023, and the same amount in 2024. Analysts at Capital Economics predict house prices will fall by a total of 12% by mid-2024.
The Office for Budget Responsibility (OBR) predicts property prices will hit a low between December 2024 and early 2025, before climbing back up again.
It expects the average UK price to drop to £266,000 next year – a 7.6% fall from the peak we saw in late 2022.
Prices will then grow again and overtake the previous peak of £293,000 in 2027. By the end of the forecast, in 2029, prices are expected to be 6.4pc higher than they were in 2022.
- Find out more: how house prices are performing against 2023 predictions
Is it possible to get a good mortgage deal?
Mortgage rates have dipped in recent weeks, and the Bank of England’s decision to freeze the base rate in September and November was welcome news for homeowners.
The average rate for a five-year fix has slipped below 6%, so deals are getting cheaper. However, they aren’t expected to drop significantly as experts believe they will soon begin to plateau.
For the latest information, check out our guide on the best mortgage rates.
If you’re coming up to the end of your fixed term, our story on what to do if you need to remortgage offers advice on your options.
Finally, if you’re struggling to make your current repayments, see our guide on what to do if you can’t pay your mortgage.
This story is regularly updated with the latest house price index figures and expert views. The last update was on 4 December 2023.
