UK house prices fall as market continues to slow

Average house UK home prices fell by 0.4% in October compared with a month earlier, according to the latest house price data for October.

The annual rate of growth dropped to 8.3%, down from 9.8%, taking the typical UK property cost to £292,598, a fall from £293,664 last month.

All English regions with the exception of the North East experienced weaker annual price inflation during October compared to September. However, the West Midlands now has the joint highest annual growth of any UK region at 11.7% (average property price of £254,962), down from 13.2% the previous month.

Wales saw the same rate of annual growth at +11.7%, though this was a fall from +14.4% (average property cost of £222,852).

Scotland has also seen it’s pace of annual house price inflation slow to 7.5%, down from 8.3%, with a typical property now costing £203,820.

House prices in Northern Ireland are up 9.5% year-on-year, easing back from 10.9% last month. At £184,440 the average house price remains some £46,500 below its pre-financial crisis peak in mid-2007.

The pace of annual property price inflation also slowed in London, which continues to lag the other UK regions and nations. House prices have risen +6.8% over the last 12 months. However, given the cost of the capital’s average property (£551,320), London still recorded the biggest cash increase of any UK region over the past year (+£34,900).

Kim Kinnaird, Director, Halifax Mortgages, said: “Average house prices fell in October, the third such decrease in the past four months. The drop of 0.4% is the sharpest we have seen since February 2021, taking the typical property price to a five-month low of £292,598.

“Though the recent period of rapid house price inflation may now be at an end, it’s important to keep this is
context, with average property prices rising more than £22,000 in the past 12 months, and by almost £60,000
(+25.7%) over the last three years, which is significant.

“While a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant
shock as a result of the mini-budget which saw a sudden acceleration in mortgage rate increases. While it is
likely that those rates have peaked for now – following the reversal of previously announced fiscal measures – it
appears that recent events have encouraged those with existing mortgages to look at their options, and some
would-be homebuyers to take a pause.

“Understandably we have also seen consumer caution grow, as industry data shows mortgage approvals and
demand for borrowing declining. The rising cost of living coupled with already stretched mortgage affordability is
expected to continue to weigh on activity levels. With tax rises and spending cuts expected in the Autumn
Statement, economic headwinds point to a much slower period for house prices.

“While certain longer-term, structural market factors which support higher house prices – like the shortage of
available properties for sale – are likely to remain, how significantly prices might ultimately adjust will also be
determined by the performance of the labour market.

“Currently joblessness remains historically low, but with growing expectations of the UK entering a recession,
unemployment is expected to rise. Whilst it may not spike to the same extent as seen in previous downturns,
history tells us that how this picture develops in the coming months will be a key determinant of house price
performance into next year and beyond.”

Responding to the release of Halifax’s House Price Index this morning, Jeremy Leaf, north London estate agent, commented: “These comprehensive figures are particularly interesting as the modest monthly fall in house prices shows on the one hand the resilience of the market in the period leading up to the mini-Budget, as well as the uncertainty which followed.

“Since then, we’ve seen on the ground a combination of those trying to take advantage of attractive mortgage offers and new buyers slowly emerging now mortgage rates are steadying and even starting to fall. But we are not seeing any collapse in pricing or sales agreed.”

Nathan Emerson, chief executive of Propertymark, said: “The latest Halifax House Price Index continues to show a fall away in house prices which, alongside additional help from the new higher Stamp Duty threshold, will now see the purchasing power of first-time and other homebuyers improved.

“There are also more homes for sale coming to the market which is providing buyers with a greater choice. This will therefore mean they can be more level-headed with the offers they’re putting forward which will naturally see a softening in prices being achieved over the next few months.”

Avinav Nigam, co-founder of property investment platform, IMMO, added: “The annual slowdown in house price growth was expected in the context of higher interest rates. This impact is showing up in the data now, reflecting decisions made earlier in the summer when rates began to rise. 

“We are seeing property listings falling by 15 to 20 per cent in some parts of the UK, as uncertainty encourages property owners to delay transaction decisions. 

As it becomes harder and more expensive to buy, demand for rental properties is expected to grow. Meanwhile, many smaller private investors are exiting due to higher finance and regulatory compliance costs. There’s a clear opportunity for professional providers of safe, quality and affordable rental housing for the UK.”



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