ONS: First annual house price fall in a decade

Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the publication of the ONS House Price index, showing the first annual house price fall in a decade.

Key points from publication:

• • Average house prices across the UK were down 0.1% in the year to September – the first annual fall registered by the index since April 2012.
  • Prices dropped from late last year to hit a low point in March 2023. They’ve been rising since – until September, when prices fell 0.5%.
  • The average house price was £291,000.
  • House price movements ranged from a rise of 1.6% in the North East to a fall of 1.6% in the South West.
  • The highest average price was in London, at £537,000, but they fell 1.1% in a year.
  • All property types have fallen in price during the year, except detached houses up 0.6%. Terraced houses have done worst – down 1.5%.

Sarah Coles says:

“The long-awaited drop in house prices has finally materialised.

“The market has proved incredibly resilient in the face of overwhelming headwinds, but mortgage rate hikes over the summer dealt the final blow, pushing prices into negative territory.

“This may not be a prolonged slump, because we’re comparing annual prices to what proved close to the peak of the market a year earlier.

“From November last year prices were on their way down, so even if the property market remains weak, we could still see the annual figures turn positive.

“Even if these price drops don’t take hold, it’s still a really horrible time to be trying to sell a property.

“Sales have slowed to a snail’s pace, so the Zoopla figures show sellers are being forced to slash asking prices in order to shift their home.

“We can expect this to show up in the official figures in around three months. 

“It’s hardly surprising that so many homeowners are choosing to bide their time, and wait to put their home on the market – in the hope that lower interest rates next year could bring buyers back, and secure a better price.

“The wait-and-see approach has its attractions, but it does come with some risk.

“Even if mortgage rates fall, if buyers and sellers return in their droves, it’s going to mean more competition, and it could push prices higher.

“What you save through a lower mortgage rate you could lose through higher prices.

“If you decide to sit tight, you also need to make sure your deposit spends those months in the most competitive easy access savings account possible.

“Lower inflation means that savings accounts are offering rates ahead of inflation, so while there are few risks we can avoid in the housing market, this is one we can now overcome by shopping around for a good deal.”

Kindly shared by Hargreaves Lansdown