Residential property prices in the UK increased by an average of 10.3% in November compared with the same month in 2021, the Office for National Statistics (ONS) said yesterday, slowing from October’s revised 12.4% rise.

London saw the lowest annual increase of all English regions with prices up 6.3%.

Economists polled by Reuters in November forecast that house prices would fall by 5% this year, while analysts at Japanese bank Nomura have predicted a 15% drop by mid-2024.

Industry reaction:

Jean Jameson, chief sales officer at Foxtons, commented: “2022 began as a fast-paced sellers’ market, and London saw some of its highest levels of exchange volumes since 2017. As buyers rushed to meet the Help to Buy deadline, Foxtons New Homes saw their best start to the year since 2019. Although buyers became more cautious towards the end of the year amid mounting political and economic pressure, we saw many press on with their purchases. In fact, our more suburban markets, particularly in South and South West London, had some of their strongest results since 2015.

The mortgage market is recovering, with best buy rates down significantly from their Mini Budget spikes, and the housing market is predicted to cool somewhat in the new year. This should allow prices to begin to stabilise in some areas and provide new opportunities to invest.”

Nathan Emerson, Propertymark ehief executive, said: “In November, our agents reported a market that was on the cusp of seeing purchasing power handed back to buyers which was a trend we hadn’t seen in months.

“Interestingly, estate agents in London are reporting buyers agreeing sales at under the asking price, however agents in the North West are seeing properties sell for asking price very quickly after being marketed, sometimes in a matter of days. Buyers are looking for more affordable properties, if sellers are realistic with their pricing, there are plenty of serious buyers out there that will move quickly.”

Nick Leeming, chairman of Jackson-Stops, commented: “With house prices continuing to rise on both a monthly and annual basis, the question on the market’s lips now is whether we’ve reached the peak of house prices or if there is still more space to climb. There was a sense that a quietened festive period would allow supply and demand levels to balance out, but the sheer level of competition that remains underpins the strength in the market to ensure a soft landing on predicted price falls.

“While the levels of growth month on month might be narrowing, it’s important to look back on the year as a whole. Those that owned a property in November 2021 in the past 12 months have made £28,000 on average. Jackson-Stops’ own national branch data shows a hopeful picture for December, with instructions up 47% giving buyers much more choice, alongside an 165% uptick is agreed sales compared to the same period last year, demonstrating the sustained appetite for good family homes.

“Although the market has not been immune from political and economic uncertainty, it will be more sharply felt by those at the start of their property journey or on a fixed rate deal coming to an end. Despite our challenging lending environment with interest rates now at 3.5%, it is important to remember that borrowing remains accessible and while current rates are not an indication of future ones, there are still opportunities to be had – mortgage rates have now fallen to their lowest for three months.

“The government’s recent decision to remove the mortgage stress test from August 1^st  2022 demonstrated a commitment to keeping the market moving. House prices are much steadier than six months ago, with previous wild spikes in values now cooling back down to the realms of normality. It will be homes that are optimistically priced to test the market that may fall victim to much lengthier transaction times, with an increased likelihood of down valuations and unprepared buyers.”

Tom Bill, head of UK residential research at Knight Frank, said: “The figures highlight the change that has taken place in the UK property market over recent months. The experience for people completing their purchase last November contrasts sharply with the reality faced by buyers who are starting their search this month. Mortgage rates are edging down as the shock of the mini-Budget works its way through the system but are still around 1.5 percentage points higher than last summer. A new normal is gradually emerging for rates and over the next few months we will get a clearer sense of how people react once they recalculate their budgets. This decision-making process rather than what happened last year will set the trajectory for the housing market in 2023.”

Jason Tebb, CEO of OnTheMarket, commented: “This data may be a little historic but shows a slowdown in annual price growth in November which many anticipated. Continuing upheaval, changes in the macro-economic climate and the chatter around mortgage rates, with fixes in particular much higher than borrowers have become accustomed to, are all bound to have affected the confidence of the average property-seeker.

That said, while the market continues to rebalance, it is doing so in a reassuringly measured way rather than a drastic readjustment. There will always be those who need to move and properties which are priced effectively should lead to successful transactions, even in a tougher market.”

Andy Sommerville, director at Search Acumen, said: “As we shake off our January blues, it comes as no surprise to see that house price data this month indicates a flatline in growth reflective of current macro-economic conditions. As one of the coldest months of the year when people will be particularly concerned with rising energy prices, and with inflation still hitting families hard, we expect this tightening trajectory to continue.

“With house price values in a likely slow but steady decline as we settle into a recessionary period, this raises the likelihood of uncertain transactions with more down valuations, gazundering and buyers pulling out of deals altogether. The latest data from Land Registry shows that completion times are ranging from eight minutes to over eight months. This, combined with the upcoming strike by HMLR planned for February, means delays are not only prevalent but set to continue. We know over a third of property sales fell through last year, peaking at over 52% of all transactions in November. To avoid a house of cards in 2023, it is more important than ever that the industry engages with all digital tools at their disposal for a fast and efficient transaction.

“As buyers try to beat the tide on increasing interest rates, property solicitors will be feeling the pressure more than ever. Alongside increasingly complex transactions, longer chains, and greater risks, how each firm fares in the months ahead will be defined by how well it learns the lessons of the pandemic and continues to invest in innovation as a tool for efficiency and cost saving in challenging times. Land Registry is looking to collect 70% of applications via automation in the next three years – at the moment this number sits at 29%. It is clear that tech plays a vital role as part of the solution to keep the market moving.”

James Forrester, MD of Barrows and Forrester, commented: “The first monthly reduction in house prices in 13 months is sure to spur panic and predictions of a property market collapse, but to do so based on just one month is quite frankly ludicrous.

The reality is that the property market has well and truly weathered the storm caused by the incompetence of the UK government and remains in fine form despite a very marginal reduction in property values.

If we were going to see a notable dip, it would have materialised by now. This hasn’t been the case and while the heat of the pandemic market boom may have subsided, property prices remain considerably higher than they were this time last year.”