Weaker demand and reduced buying power have resulted in a dramatic slowdown in house price growth over the past year, according to Zoopla.

Previously concentrated in southern England, house price falls are now impacting lower-value markets with around 80% of housing markets registering annual house price falls – this is up from 5% just six months ago.

The scale of house price falls is limited to low single digits with the largest annual falls registered in commuter towns around London and across the South East.

Of the one in five markets registering annual house price growth, the highest growth rate is 3.6% in Halifax, Yorkshire. 

Property industry reactions:

Tom Bill, head of UK residential research at Knight Frank, commented: “A strong jobs market is normally a positive sign for the UK housing market but not this year. Wage growth has kept both inflation and interest rates high, with mortgage rates having tripled in three years. It means the seasonal autumn bounce has failed to materialise for the second year running. The major difference in 2022 was that there was a quick fix in the shape of a new prime minister.

“Stubborn inflation over the summer sent rates higher again and activity levels will only improve this time round once buyers come to terms with higher borrowing costs and sellers with lower asking prices. Furthermore, as the general election approaches, attention is beginning to shift away from the Bank of England and towards Westminster for those attempting to guess the market’s trajectory. Housing market activity tends to stutter before elections.”

Karl Knipe, director of Kings Group, said: “It’s important to take a long-term view when buying a house. Very low single-digit price rises or falls make no difference when buying a home that you will live in for many years – it shouldn’t be relevant. The forecasts are showing that 2024 looks like it will be a similar year to 2023, so if you want or need to move and buy your own ‘castle’ – now is the time to do your homework and put yourself in the best position for the new year knowledge wise, financially wise and ability wise. This will ensure you’re set up to move quickly if you find a home that suits your needs.”

Nigel Bishop of Recoco Property Search, commented: “The UK’s property market, particularly at the higher end where properties cost a minimum of £1mn, has seen a noticeable boost in cash buyers over the past year. This increase has been driven by less favourable interest rates and, with rates unlikely to decrease any time soon, will continue in 2024. The presence of more cash buyers could create further challenges for buyers who are reliant on a mortgage as some sellers favour cash transactions for their chain free nature which often results in an overall faster sales process.”

Adam Feather of Robert Anthony Estate Agents, said: “The housing market is more price sensitive than it has been for quite some time, making pricing accurately extremely important. Being overly optimistic with the asking price cis likely to deter potential purchasers.

“Sellers who price realistically or even a little modestly, will almost certainly find they are met with greater interest from prospective purchasers. It’s been a bit of a topsy-turvy market this year but there are tentative signs that confidence is returning, although property prices do look set to fall in the short- to medium-term, albeit marginally.”

Mark Michaelides, VP strategy & corporate initiatives at Molo, commented: “House prices in England and Wales have fallen over the last year as demand weakens in the face of higher mortgage rates. The Bank of England’s decision to freeze interest rates last month encouraged lenders to start reducing mortgage rates which has meant the scale of price falls has been modest. Despite this, some prospective buyers are waiting for better value for money and improved affordability from lower house prices or further falls in mortgage rates before returning to the market.”