Feeling a bit lost with so many house price indices out there?
The HomeOwners Alliance House Price Watch looks at all the information from the many indices out there to give you one easy-to-digest round-up of everything you need to know.
So, let’s look at how prices have changed over the past month and year.
What’s going on with house prices?
When you average out the figures reported by the major indices, monthly house prices posted a surprise increase of 0.5% in October (see chart below).
However, this is unlikely to represent the start of a resurgence in property values given that the market remains constrained by high lending costs and limited buyer demand.
This is evident when you look at the annual trend, which shows house prices are down 2.2% over the last 12 months.
Why house prices are falling
We have seen a staggering rise in UK house prices since COVID struck.
A combination of incredibly cheap mortgages and cash-flush buyers led to sharp growth each year since 2020.
However, the outlook has changed dramatically in the last year and a half, with the cost of living crisis biting hard after the era of cheap loans came to a crashing halt.
The impact of this squeeze is now starting to filter through to home sale prices, as you can see from the graph below.
After years of double-digit increases, annual house price growth started nosediving late last Summer and has been in negative territory since July 2023.
What will happen to prices over the next year?
The aforementioned rise in borrowing costs will likely mean the October price hike is likely to prove shortlived, according to Nationwide.
“The uptick in house prices in October most likely reflects the fact that the supply of properties is constrained,” it said.
“Activity and house prices are likely to remain subdued in the coming quarters.
“Despite signs that cost-of-living pressures are easing, with the rate of inflation now running below the rate of average earnings growth, consumer confidence remains weak.”
Rightmove added some context to the price hikes seen in October: “Although newly advertised property prices typically rise at this time of year, this is the smallest increase in our October report since 2008, and significantly below the average increase of 1.4% seen at this time over the last 20 years.”
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What’s happening to house prices near me?
Land Registry has the most comprehensive data regarding housing stock, and it provides a handy regional breakdown of house prices across the UK.
However, its data takes slightly longer to compile so isn’t quite as up-to-date as that of the other property indices.
Nonetheless, it provides an interesting insight into how areas are faring relative to each other.
Looking at the last 12 months, its figures showed that Only two areas were still reporting positive growth, with Northern Ireland proving the most buoyant at 3.1% followed by the North West at 0.5%.
At the other end of the scale, the Yorkshire & The Humber (-2.4%), the North East (-2%) and Wales (-0.9%) reported the biggest falls in September
– the latest Land Registry figures available.
What the indices say
HomeOwners Alliance
“House price growth slowed from 8.3% to -2.2% over the past year and transactions are likely to be 12% lower than 2019, the last ‘normal’ housing market benchmark.
“While house prices nudged up this month, activity and house prices are expected to remain subdued into 2024.
“Affordability remains stretched but the first-time buyer market has held up relatively well. Buying a first home remains attractive for many, especially against the backdrop of rental prices increasing.”
Rightmove
“New seller asking prices rise by 0.5% (+£1,950) this month to £368,231.
“Although newly advertised property prices typically rise at this time of year, this is the smallest increase in our October report since 2008, and significantly below the average increase of 1.4% seen at this time over the last 20 years.
“However, despite this more muted rise in average asking prices, buyer activity levels remain significantly lower than during the post-pandemic market frenzy.
“The number of sales being agreed is now 17% below this time last year, with the proportion of homes finding a buyer and being marked Sold Subject To Contract dropping from an average of eight in ten at the height of the frenzy, to six in ten now.”
Nationwide
“October saw a 0.9% rise in UK house prices, after taking account of seasonal effects. This resulted in an improvement in the annual rate of house price growth to -3.3%, from -5.3% in September.
“Nevertheless, housing market activity has remained extremely weak, with just 43,300 mortgages approved for house purchase in September, around 30% below the monthly average prevailing in 2019.
“This is not surprising as affordability remains stretched. The uptick in house prices in October most likely reflects the fact that the supply of properties is constrained.
“There is little sign of forced selling, which would exert downward pressure on prices, as labour market conditions are solid and mortgage arrears are at historically low levels.
“Activity and house prices are likely to remain subdued in the coming quarters.
“Despite signs that cost-of-living pressures are easing, with the rate of inflation now running below the rate of average earnings growth, consumer confidence remains weak.”
Halifax
“UK house prices rose in October, up +1.1% on a monthly basis, breaking a run of six consecutive monthly falls. The average house price is now £281,974 – an increase of almost £3,000 compared to the previous month.
“On an annual basis, prices are down -3.2%, though the decline was at a slower pace than we saw in September (- 4.5%). Average house price £281,974 Monthly change +1.1% Quarterly change -1.9% Annual change -3.2% “Prospective sellers appear to be taking a cautious attitude, leading to a low supply of homes for sale.
“This is likely to have strengthened prices in the short-term, rather than prices being driven by buyer demand, which remains weak overall. While many people will have seen their income grow through wage rises, higher interest rates and wider affordability pressures continue to be challenges for buyers.
“Despite weakness in overall buyer demand, the first-time buyer market has held up relatively well. Buying a first home remains attractive for many, especially against the backdrop of rental prices increasing.”
Zoopla
“House price inflation has slowed from 9.6% to -1.1% over the last year with 4 in 5 housing markets registering small annual price falls. Regulation of mortgage lending has built market resilience to higher mortgage rates although household buying power remains lower.
“Transactions have been hit hardest and will be 23% lower than 2022.
“First-time buyers and cash buyers account for 2 in 3 sales in 2023. Low price falls and 5% mortgage rates mean housing is still expensive. We expect UK house prices to fall 2% over 2024 as rising incomes steadily repair housing affordability.
“2024 is set for another year of 1 million sales. This could be higher if mortgage rates fall back towards 4% sooner than expected in 2024.”
RICS
The October 2023 RICS UK Residential Survey results once again point to a subdued picture for home buyer activity as the market continues to adjust to the tighter lending climate.
“That said, although many aspects of the latest feedback remain downbeat, the current readings across most indicators are at least somewhat less negative than those returned in the previous iteration of the survey.”
