Unseasonably Weak Autumn in UK Housing Market

In a surprising twist, UK house prices have finally broken free from a six-month-long decline, surging by 1.1 per cent in October.

This welcome uptick brings the average house price to £281,974, a gain of nearly £3,000 from the previous month.

However, it’s not all smooth sailing.

On an annual basis, prices are still down by 3.2 per cent, though the rate of decline has slowed compared to the worrisome drop of 4.5 per cent witnessed in September.

What’s driving this sudden shift?

Prospective sellers seem to be playing it safe, resulting in a limited supply of homes for sale.

This cautious approach is likely bolstering prices in the short term, but it’s not a sign of robust buyer demand, which continues to remain weak.

Kim Kinnaird, Director of Halifax Mortgages, points out that while income growth is a reality for many due to wage increases, higher interest rates, and broader affordability challenges still loom large for potential buyers.

What Lies Ahead for UK House Prices?

Looking ahead, it’s worth noting that financial markets don’t anticipate a decline in the Bank of England’s Base Rate anytime soon.

As a result, experts predict that house prices may continue to slide in the medium term, with a potential return to growth expected by 2025.

Kinnaird highlights that this current scenario should be viewed in the context of the broader house price trend, where prices still sit at approximately £40,000 above pre-pandemic levels.

First-Time Buyers Remain Resilient

Despite overall subdued buyer demand, the first-time buyer market has held up relatively well.

Owning a first home remains attractive, particularly in light of rising rental prices.

The latest data reveals that prices for first-time buyers have declined by only 2.4 per cent annually, a notably smaller fall compared to the market as a whole, which stands at 3.2 per cent over the past year.

Regional Variation

Across all UK nations and regions, house prices have experienced annual declines.

The steepest drop was seen in South East England, where prices plummeted by 6.0 per cent over the last year, with the average house price now at £374,066.

In contrast, Scotland’s annual house price showed remarkable resilience, with a mere 0.2 per cent decline, bringing the average home price to £202,608.

Northern Ireland followed with a decrease of 0.5 per cent, maintaining an average house price of £183,922.

Wales saw a 3.9 per cent drop in property prices over the year, with the average house price at £213,125.

Meanwhile, London retains its status as the priciest city, with an average house price of £524,057, despite a 4.6 per cent decline over the past year.