UK house prices fall at fastest rate for more than 12 years, says ONS
House prices in the UK have dropped faster than they have in over 12 years.
The average home is now £6,000 cheaper than last year, says the Office for National Statistics (ONS). Aimee North from the ONS said: "The annual fall in house prices continues to accelerate, with the average cost of a home falling at its fastest rate for over 12 years. Meanwhile annual rent increases remain at record levels across the country."
In England and Wales, house prices went down over the year, but Scotland and Northern Ireland saw rises. In England, the average house price fell by 2.9% to £302,000, and in Wales, it went down by 2.4% to £213,000.
Scotland's average house price went up by 2.2% to £194,000, and in Northern Ireland, it rose by 2.1% to £180,000. London had the biggest fall in house prices in England, while the North East saw the smallest drop.
These figures come as inflation unexpectedly went up. The rate of Consumer Prices Index (CPI) inflation sped up to 4% in December, from 3.9% in November, surprising many economists who had expected the rate to drop slightly.
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Worries are also growing about the impact of the Red Sea shipping attacks on inflation, as it could increase the cost of oil, gas and goods being imported to the UK. Mortgage rates have been dropping recently, with many lenders kicking off the new year by slashing rates.
However, some housing market experts said the quickening in inflation could make lenders more cautious, as hopes of a Bank of England base rate cut are delayed. Frances McDonald, director of research at property agents Savills, commented: "Today’s ONS house price index for November indicates that stretched mortgage affordability continued to place downward pressure on house prices in the final weeks of 2023.
“Looking ahead, there are encouraging signs that buyers are gaining confidence as mortgage rates fall, though today’s surprise inflation figures may push out expectations of a Bank of England base rate cut.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, noted: "The downwards rate war continues to pick up momentum although there is no guarantee that mortgage rates will keep tumbling. There are bound to be blips as it is still quite volatile out there, as today’s inflation figures suggest.
“Swap rates, which underpin the pricing of fixed-rate mortgages, have been falling over the past month but ticked up today on the back of the inflation data. While the rate trajectory is on the whole downwards, borrowers need to be mindful that if they like the look of a rate it might not be around for long.”
Matt Smith, Rightmove's mortgage expert, shared: "Average (mortgage) rates had been falling pretty sharply, but this is likely this to slow as lenders take a more cautious approach over the next few weeks. The big picture is still positive for mortgage rates, with rates more stable and attractive for movers than a year ago."
Nick Leeming, chairman of estate agent Jackson-Stops, pointed out: "The figures published today suggest a frosty end to the year, with buyers putting their searches on hold in order to see how mortgage rates would react as inflation fell once again. 2023 was defined by mortgage affordability pressures and a shift from immense competition, towards a smaller, more committed buyer pool."
Ross McMillan, owner at Glasgow-based Blue Fish Mortgage Solutions, told Newspage online: "Sentiment reigns supreme in the housing market, and in Scotland it's very positive at present. Whilst a modest uptick in inflation may create a degree of uncertainty, it's crucial to recognise that buyer enthusiasm and activity have experienced a noticeable revival in the opening weeks of 2024."
Andrew Montlake, managing director at nationwide broker Coreco, told Newspage: "Those in the mortgage market will be watching swap rates closely and it could mean a slight pause to the new year rate wars we have seen, but competition between lenders is unlikely to wane."
Simon Gerrard, managing director of London-based Martyn Gerrard estate agents, observed: "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."
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Data from the ONS tells us that private rental prices paid by tenants in the UK have risen by 6.2% over the year ending December 2023. That's exactly the same rate as the previous 12-month period up to November and it's equal to the highest yearly percentage change since recording started in January 2016.
Renting prices went up by 6.3% in Scotland - the highest annual rate since records began in January 2012. Meanwhile, in England increased 6.1% for the year ending December 2023, which is identical to the rate for the prior 12 months up to November.
When London is taken out of the equation, rental prices rose by 5.7% for the year ending December 2023. According to the ONS, these stats match the greatest yearly percentage increases since stats escorting started in January 2006.
Private rental prices in London rose by 6.8% in the year to December 2023, a slight decrease from a record-high rise of 6.9% in the 12 months to November 2023. In Wales, rents increased by 7.1% in the year to December 2023, slightly down from a record high increase of 7.3% in the 12 months to November 2023.
Meanwhile, private rental prices in Northern Ireland saw an increase of 9.3% in the 12 months to October 2023. The annual rate for Northern Ireland has generally slowed since a recent peak of 10.0% in the 12 months to March 2023, according to the report. The data for Northern Ireland is usually behind the rest of the UK.
* An AI tool was used to add an extra layer to the editing process for this story. You can report any errors to [email protected]
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