"While higher mortgage rates will continue to weigh on the majority of buyers minds, falling inflation will sow the seeds for a busier start to the market in 2024."
- Nick Leeming, Chairman of Jackson-Stops
Average UK house prices decreased by 2.1% in the 12 months to November 2023, down from a decrease of 1.3% in the 12 months to October and the largest annual fall since 2011, according to the latest UK House Price Index from the Land Registry.
The average UK house price was £285,000 in November, which was £6,000 lower than 12 months ago.
Average house prices over the year decreased by -2.9% in England, by -2.4% in Wales to £213,000, but increased by 2.2% in Scotland 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 price 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.
Nick Leeming, Chairman of Jackson-Stops, said: “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.
“While higher mortgage rates will continue to weigh on the majority of buyers minds, falling inflation will sow the seeds for a busier start to the market in 2024.
“Lifestyle will be the dominant call for the majority of buyers, driven by distance to work, expanding and retracting families, and home needs. This committed pool of buyers will be targeting only the best-in-class homes as sale listings increase, making price a significant determining factor for a successful sale. The frenzied market that emerged post-pandemic is not the case anymore. Even as buyers adjust to higher mortgage rates the need to get better value from the property itself is likely to play a part in final agreed prices.
“The 2024 property market is also likely to be impacted by an election. Always a divisive issue, housing is likely to be pushed up the political agenda with major parties both challenging for the hearts and votes of current and prospective homeowners. Supply shortages, market liquidity, and the increasing age of first-time buyers, are all likely to be key discussion points for parties to define positions on. In the coming months, the property market will be gathering around its crystal ball to predict what all political outcomes could mean for local and national property markets.”
Alan Davison, director of customer sales at Together, commented: “Lower prices today further signal a lack in strength and confidence across the property market continues after a sluggish 2023.
“For the most part, buyer’s spending power is still limited. And, with the Bank of England under big pressure to act and cut its key lending rate, there could be increased support for borrowers and their property ambitions this year. A key driver behind whether this happens or not will depend on whether inflation reduces further.
“Indeed, both residential and commercial property buyers will have a keen eye on market fluctuations this week and be busily weighing up whether to make a move now or keep cautious and hold for further assurance that the market will retain buoyancy.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “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, with five-year Swaps rising to 3.69% from 3.54% yesterday.
“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 so they should speak to a whole-of-market broker and secure it sooner rather than later."
