Average UK house prices see largest annual fall since 2011: UK HPI

New figures released by ONS and the Land Registry have revealed that average UK house prices saw a 2.1% fall in the 12 months to November 2023.

Related topics:  Property,  house prices,  UK HPI
Property | Reporter
17th January 2024
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"It's very difficult to take statistics from the ONS with any less than a pinch of salt because the figures are out-of-date and irrelevant for all intents and purposes since they rely on land registry data, which is six months behind."
- Simon Gerrard - Martyn Gerrard

The latest UK House Price Index from the Land Registry has shown that UK house price annual inflation has been generally slowing since July 2022, when annual inflation was 13.8%.

Albeit slightly historical, today's data revealed that average UK house prices fell by 2.1% in the 12 months to November 2023. This was down from a decrease of 1.3% in the previous month and the largest annual fall since 2011.

The data shows that the cost of a typical UK home was £285,000 in November - £6,000 lower than 12 months ago.

Regional breakdown

Average house prices over the year decreased by -2.9% in England and by -2.4% in Wales to £213,000. However, in Scotland, there was a rise of 2.2% and 2.1% in Northern Ireland.

The North East was the English region that saw the smallest decrease in average house prices in the 12 months to November 2023 (-0.4%). London saw the largest fall at -6.0%, down from an annual inflation rate of -3.4% in the 12 months to October and the lowest annual inflation rate since 2009.

London's annual inflation slowed in November 2023 because London prices fell between October and November 2023, while prices rose between the same months a year before.

On a seasonally adjusted basis, average UK house prices decreased by 0.4% in November, following a month-on-month decrease of 0.3% in October. On a non-seasonally adjusted basis, prices fell by 0.8% in November, following a monthly decrease of 0.6% in October.

Nathan Emerson CEO Propertymark comments: “A drop in house prices is inevitable and natural when finding a balance in affordability during turbulent economic times. We want to see affordability further improve for homeowners and in order to achieve that, inflation rates will need to get closer to the government’s two per cent target, which in turn will impact the Bank of England’s ability to begin reducing interest rates from February onwards.

"We would also hope the UK Government looks at options to increase housing supply in a market in order to keep up with growing demand.”

Simon Gerrard, Managing Director of Martyn Gerrard, said: “It's very difficult to take statistics from the ONS with any less than a pinch of salt because the figures are out-of-date and irrelevant for all intents and purposes since they rely on land registry data, which is six months behind.

"On the ground, it’s clear the market has turned a corner. We’ve seen a 20% increase in people registering to buy a home compared to this time last year.

“This is unsurprising given the growing competition between lenders—Barclays and Santander cut rates on some of their offerings by up to 0.82% last week. This will intensify when the Bank of England starts dropping the interest rate, which is expected soon. Once this takes place, I expect that we will see a lot of pent-up demand unleashed.

“The Bank of England’s decision at the next meeting on the 1st of February will be pivotal in deciding the market’s next move. If they cut rates, expect house prices to start increasing quite quickly, as after all, we are still facing a property market with demand that vastly outstrips supply.

“I have always maintained the fall in house prices would be muted and temporary. The market seems to now share this view with recent headlines showing previously gloomy forecasts for house prices this year revised upwards.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “These figures reflect housing market activity of at least a few months ago, even though they are the most comprehensive of all the surveys as they include cash and mortgage transactions.

“At that time, buyers and sellers were reacting to uncertain economic times before inflation and mortgage rates had started to stabilise and fall. On the ground, the situation is different now with early signs of an improvement in confidence, translating into more viewings and offers. 

"However, the inflation figures today show there is still a long way to go and it is likely to be a bumpy ride."

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