House prices officially fall for first time since 2012, says ONS

House prices have fallen annually for the first time since April 2012, according to official figures.

House prices fell 0.1 per cent in the 12 months to September, after previously rising 0.8 per cent in the year to August, the latest data from the Office for National Statistics shows.

On a monthly basis, the median home decreased 0.5 percent in September, following an increase of 1.1 percent in August.

The pace of house price growth has been slowing since July last year, when annual prices rose at a rate of 13.8 percent.

The ONS estimates that the average UK home value is £291,000 in September, which is little changed from 12 months ago.

Jonathan Hopper, chief executive of estate agency Garrington Property Finders, said: ‘Months of falling frontline property prices have finally been reflected in official figures.

“A 0.1 per cent fall in average house prices over 12 months may not seem like much, but it is worth noting that this is the first time prices have fallen annually for more than 11 years.”

The expectation is that we could see new falls in the coming months. The ONS figures are based on sales prices recorded by the Property Registry, so there is a large gap, as sales agreed today can take many months to come to fruition.

Earlier this week, Rightmove reported that sales prices of newly listed homes fell by 1.7 per cent this month, the biggest November drop recorded by the property website since 2018.

Before that, the latest survey by the Royal Institution of Chartered Surveyors (Rics) also suggested that prices remain on a downward trajectory.

Halifax and Nationwide, which monitor house prices based on their own mortgage approvals, recorded annual falls of 3.2 per cent and 3.3 per cent respectively in the 12 months to October.

Flat: Average house prices changed little in the 12 months to September 2023, ONS says

Property group JLL predicts property prices in Britain will have fallen 6 per cent by the end of 2023 and 3 per cent the following year.

Estate agent Savills predicts house prices will “bottom” next year, falling a “modest” 3 per cent before starting to rise again.

However, while sentiment remains negative for the coming months, many are optimistic that the market will begin to recover in 2024.

Anthony Codling, head of European housing and building materials research at RBC Capital Markets, said: “One month does not indicate a turning point and we don’t think house prices are about to collapse, but today’s data highlights the importance of mortgages”. market on housing prices.

“The overwhelming majority of homeowners have a significant amount of Covid capital, house prices are on average £60,000 or 26 per cent higher than before the first lockdown and with the CPI continuing to fall, the pressure on mortgage rates is declining. .’

Hopper added: “While the delay in ONS data means it is likely to show further falls in the coming months, the dark clouds that have been parked over the property market for the past year are starting to lift.

‘While mortgage interest rates remain painfully high compared to what they were for more than a decade after the financial crisis, they have already come down from this year’s peak.

“Reducing interest rates should bring more potential buyers out of the woodwork to see what they can afford in this post-correction market.”

House prices continue to rise in the North and Midlands

At the regional level, house prices have behaved slightly differently.

The average house price in England fell 0.5 per cent in the 12 months to September.

This represents the first annual fall in the average house price in England since January 2012.

Within England, house price movements ranged between a rise of 1.6 per cent in the north-east and a fall of 1.6 per cent in the south-west.

London, which has the highest property prices, with an average cost of £537,000, recorded an annual fall of 1.1 per cent.

Regional variation: In England, house price movements ranged from a 1.6 per cent rise in the north-east to a 1.6 per cent fall in the south-west.

The average house price in Wales also fell by 2.7 per cent over the 12 months to September.

Meanwhile, the average house price in Scotland rose 2.5 per cent year-on-year and the typical house price in Northern Ireland also rose 2.1 per cent over the year.

Nathan Emerson, chief executive of estate agent membership body Propertymark, said he was optimistic about a smoother path for the property market.

“Across the UK, we are starting to see certain geographic regions showing a small increase in house prices, based on month-on-month analysis,” says Emerson.

“However, it is still too early for us to safely say that we are witnessing sustained growth once again.”

“We currently find ourselves in a situation where consumers are extremely conscious of affordability and those people are only likely to commit to the property market when they feel assured of long-term stability, mainly in the form of higher interest rates. low”.

Change of course: house prices have fallen annually for the first time since April 2012, according to official figures from the Property Registry