Lowest October asking price rise since 2008

Asking prices for newly advertised properties typically go up at this time of year, but this month’s increase is well below the historic October norm of 1.4%.

New seller asking prices in October 2023 have increased by an average of just 0.5% to £368,231, according to a new report from Rightmove. It’s the smallest rise at this time of year since the height of the financial crisis in 2008.

Buyer activity levels remain significantly lower than during the post-pandemic market frenzy, the property website said. The number of sales being agreed currently stands 17% below this time last year — but there are still buyers out there for the right property at the right price.

Agents advise that sellers need to capture attention with a competitive price from the first day of marketing. Properties with a realistic asking price succeed in finding a buyer in less than half the time that it takes those that need a reduction, and when they do find a buyer the sale is also 50% less likely to fall through, Rightmove found.

“In a market that agents describe as the most price-sensitive ever, buyers are likely to be on the look-out for homes that they feel represent excellent value, and to attract one of these motivated buyers, sellers need to price right first time,” said Tim Bannister, director of Property Science at Rightmove. “If similar nearby properties for sale appear overpriced, serious sellers have an opportunity to stand out from the crowd with a more competitive price and attract immediate buyer interest that our research shows significantly increases the likelihood of finding a buyer.”

Average house prices down £14,000 in a year

House prices are continuing to fall across the UK as high interest rates make it harder for buyers to afford a new mortgage.

The latest monthly report from Halifax shows that average house prices in August 2023 were 4.6% lower than in the same month a year ago, representing a decrease of £14,000 for the average home.

It’s the biggest annual fall in 14 years, although the mortgage lender noted that this is relative to the record high property prices seen last summer.

The average home now costs £279,569, down by around £5,000 since July, and back to the level seen at the start of last year. Prices are still £40,000 higher than before the pandemic.

“We may now be seeing a greater impact from higher mortgage costs flowing through to house prices,” said Kim Kinnaird, director of Halifax Mortgages.

“The market will continue to rebalance until it finds an equilibrium where buyers are comfortable with mortgage costs in a higher range than seen over the previous 15 years.”

Halifax expects further downward pressure on house prices through to the end of this year and into 2024.

Steepest fall in house prices for 14 years

UK house prices dropped by 3.8% in July 2023, the biggest annual decline since July 2009, according to the latest monthly report from Nationwide.

The price of a typical home now stands at £260,828, a fall of 0.2% compared to the previous month and 4.5% below the August 2022 peak.

Housing affordability “remains stretched” despite the decline in prices, the building society said.

Robert Gardner, chief economist at Nationwide, said that a first-time buyer on an average wage, who had saved a 20% deposit, would see monthly mortgage payments account for 43% of their take-home pay (assuming a 6% mortgage rate). This is up from 32% a year ago.

Mortgage rates have increased following interest rate rises by the Bank of England aimed at bringing down the UK’s persistently high inflation.

Saving up enough for a deposit also presents a “high hurdle” to those looking to get on the property ladder.

“This challenging affordability picture helps to explain why housing market activity has been subdued in recent months,” Gardner said. “There were 86,000 completed housing transactions in June, 15% below the levels prevailing the same time last year and around 10% below pre-pandemic levels.”

Gardner added, however, that a “relatively soft landing” for the housing market is still possible if broader economic conditions evolve in line with expectations, with unemployment remaining low and the majority of existing borrowers withstanding the impact of higher borrowing costs.

“While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time, especially if mortgage rates moderate once Bank Rate peaks.”

House prices drop for third month in a row

UK house prices declined for the third consecutive month in June, according to the latest monthly report from the Halifax.

A typical property now costs £285,932. This is down by around £300 or 0.1% compared to May and a drop of £7,500 or 2.6% on an annual basis — the largest year-on-year decrease since June 2011.

“This rate of decline largely reflects the impact of historically high house prices last summer — annual growth peaked at 12.5% in June 2022 — supported by the temporary Stamp Duty cut,” explained Kim Kinnaird, Halifax’s director of mortgages.

Kinnaird noted that the volume of mortgage applications held up well throughout June, particularly from first-time buyers. However, the housing market remains sensitive to volatility in borrowing costs.

“Concerns about persistent inflation have led to a significant increase in the cost of funding,” Kinnaird added. “Coupled with base rate rising by another 50bp, this contributed to a big jump in typical mortgage rates over the last month.

“The resulting squeeze on affordability will inevitably act as a brake on demand, as buyers consider what they can realistically afford to offer.”

With the base rate now anticipated to peak at over 6%, mortgage rates are likely to remain higher for longer, and the squeeze on household finances will continue to put downward pressure on house prices over the coming year.

House prices continue to stabilise

UK house prices rose in April for the first time in seven months, according to the latest data from Nationwide.

From March to April the cost of an average home rose by 0.5% to reach £260,441.

However, prices were still down 2.7% on a year ago and remain 4% below their August 2022 peak.

The market was hit hard by the fallout from last September’s “mini Budget”, which led to soaring mortgage interest rates.

Nationwide’s chief economist, Robert Gardner, said the figures show “tentative signs of a recovery”.

It comes after industry data on mortgage applications pointed to signs of a pickup. There has also been a marked improvement in consumer sentiment in recent months.

“If inflation falls sharply in the second half of the year, as most analysts expect, this would likely further bolster sentiment, especially if labour market conditions remain strong,” Gardner explained.

“This, in turn, would also be likely to support a modest recovery in housing market activity.”

Gardner added, however, that any upturn is likely to remain “fairly pedestrian” as average earnings are still failing to keep pace with inflation and mortgage rates are still more than double the level prevailing a year ago.

UK housing market showing ‘relative stability’

Average house prices across the UK increased by 0.8% in March, following rise of 1.2% in February, according to the latest analysis by Halifax.

As a result, the typical property now costs £287,880. This is up from £285,660 in February but is still around 2% below the peak reached last August, the mortgage lender said.

House prices rose in all UK nations and regions in March, although the annual rate of growth continued to slow in most areas.

“On an annual basis, house prices were 1.6% higher than a year ago, slowing from 2.1% in February,” explained Kim Kinnaird, director of Halifax Mortgages. “This is the weakest rate of annual growth in nearly three-and-a-half years (October 2019), having fallen markedly since June 2022’s peak of 12.5%.

“However, overall these latest figures continue to suggest relative stability in the housing market at the start of 2023 and align with many other recent industry surveys and data. This has been characterised by a partial recovery in activity and transactions, especially when compared to the significant drops seen at the end of last year, with latest Bank of England data showing mortgage approvals rising for the first time in six months.”

The number one factor behind this improved picture is an easing of mortgage rates.

“The sudden spike in borrowing costs that we saw in November and December has now been largely reversed, and while rates remain much higher than the average of the last decade, across the industry a typical five-year fixed rate deal (75% LTV) is down by more than 100 basis points over the last few months,” Kinnaird said.

At the same time, the labour market, a key indicator for house prices, remains strong and pay growth continues to look robust.

However, Kinnaird warned that mortgage costs are unlikely to get significantly cheaper in the short term and the performance of the housing market will continue to reflect the “new norms” of higher borrowing costs and lower demand.

Consequently, Halifax still expects to see a continued slowdown over the course of this year.

UK house prices continue to fall

House prices in the UK fell again in January, taking the price of the average property to £258,297.

This was a decrease of 0.6% on December and left prices 3.2% lower than their August peak, according to building society Nationwide.

Prices are still higher than they were a year ago, but annual house price growth slowed to 1.1% in January, down from 2.8% in December.

Mortgage rates climbed throughout 2022 as the Bank of England raised interest rates to tackle high inflation. But they jumped above 6% — the highest level for 14 years — after the mini-budget of Liz Truss’s government spooked the financial markets.

Nationwide’s chief economist, Robert Gardner, said there were “encouraging signs” that mortgage rates are returning to normal levels, but it is too early to tell whether activity in the housing market has started to recover.

The latest figures from the Bank of England show that lenders approved about 35,000 mortgages in December compared with more than 46,000 in November.

“It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks,” Gardner said.

House prices fall for fourth month in a row

The average house price in the UK fell by 1.5% in December, according to the latest monthly report from Halifax.

It’s the fourth consecutive monthly fall and means that the average house price across England, Scotland, Wales and Northern Ireland is now £281,272, down from £285,425 in November.

The rate of annual growth also declined to 2%, from 4.6% a month ago, with a slowdown seen in all nations and regions.

The market has been hit by rising mortgage rates and uncertainty over how increases in the cost of living will impact household bills.

Kim Kinnaird, director of Halifax Mortgages, said that buyers and sellers are likely to “remain cautious” in 2023, leading to a reduction in both supply and demand. House prices are forecast to fall by around 8% over the course of the year.

However, the cost of the average home remains high — greater than it was at the start of 2022 and over 11% more than house prices at the beginning of 2021.

“It’s important to recognise that a drop of 8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels,” Kinnaird added.

UK house prices drop at fastest rate since 2008

House prices have fallen at the fastest rate since the financial crisis in 2008, according to the latest report from the Halifax.

The mortgage lender found that across the UK, house prices fell by 2.3% from October to November this year.

A typical UK property is now nearly £7,000 cheaper than a month ago, with the average cost of a house decreasing from £292,406 to £285,579.

It’s the third consecutive fall as the market continues to be affected by higher mortgage rates, economic uncertainty and the rising cost of living.

“While a market slowdown was expected given the known economic headwinds — and following such extensive house price inflation over the last few years (+19% since March 2020) — this month’s fall reflects the worst of the market volatility over recent months,” said Kim Kinnaird, director of Halifax Mortgages.

“Some potential home moves have been paused as homebuyers feel increased pressure on affordability and industry data continues to suggest that many buyers and sellers are taking stock while the market continues to stabilise.”

House prices remain over £12,000 higher than a year ago, and are £46,403 more expensive than in March 2020 when the Covid-19 pandemic began.

Homes near top English state schools cost 13% more on average

New research from Lloyds Bank released on Friday indicates that average property prices in the postal districts of the top 30 state schools in England have now reached GBP344,446, an average GBP40,728, or 13%, higher than county averages of GBP303,738.

Lloyds Bank figures reveal that properties near the best performing state schools were valued at 9.2 times average gross annual earnings, which is reportedly significantly higher than the average across England of 7.7 times average gross annual earnings. Top schools are defined as those secondary schools that achieved the best GCSE results in 2014.

The banking company’s research found that the postal districts of a fifth of top state schools command a housing premium of over GBP125,000, when compared to surrounding areas. Parents of pupils who attend Beaconsfield High School in Beaconsfield pay the the largest premium for their homes, with properties selling at an average GBP636,132, which is 186% above the average house price of GBP342,166 in neighbouring locations.

House prices in the postal district of The Henrietta Barnett School in Barnet were the second highest, trading at a premium of GBP418,860, followed by St. Olave’s and St. Saviour’s Grammar School in Orpington with an average premium of GBP180,447, then the Tiffin schools in Kingston upon Thames at GBP137,665.

However, the research showed that not all top rated schools are located in expensive areas. Of England’s top 30 state schools, 16 are in locations with an average property price below the average in neighbouring areas. Homes in the postal district of Aylesbury High School trade at a discount of GBP122,506, compared to the county average of GBP342,166. The next largest house price discounts in cash terms, are in Reading, Berkshire, where Reading School and Kendrick School are located, at GBP119,485. The Reading schools are followed by Queen Elizabeth’s School in Barnet, at GBP95,681 and Westcliff High School for Boys Academy in Essex at GBP58,970. 

Andrew Mason, mortgages director at Lloyds Bank mortgages director, commented:”In general, homes close to the nation’s top performing state schools command a significant premium over neighbouring areas. The presence of a top performing state school appears to help support property values in many of these locations as parents compete with other buyers to land the property that gives their child the best possible chance to attend their chosen school.”