UK house prices fell by 12.6% in the year to October, ONS says

Average property prices in the UK rose 12.6 percent in the year to October, up from a 9.9 percent increase in the 12 months to September, official figures show.

The median house price in the UK was £296,000 in October, which is £33,000 higher than this time last year and little changed from last month, the Office for National Statistics said.

The increase in the year-on-year percentage change in average house prices was mainly due to average house prices falling by £6,000 between September and October 2021, following the end of the stamp duty holiday, according to the ONS.

However, more up-to-date measures of the housing market have shown that property prices are falling month-on-month due to higher inflation, interest rates and mortgage rates.

On a seasonally adjusted basis, average house prices in the UK rose by 0.7 percent between September and October, compared with an increase of 0.5 percent in the previous month.

Average house prices rose 13.2 per cent to £316,000 in England over the period, while average prices in Wales rose 11.8 per cent to around £224,000.

In Scotland, average property prices in the year to October rose 8.5 per cent to £195,000, while in Northern Ireland prices rose 10.7 per cent to £176,000.

Aimee North, head of housing market indices at the ONS, said: ‘Annual house price inflation rose in October, although this was mainly due to the sharp fall in house prices around the same time last year after the end of the stamp duty holiday.

“London saw the lowest annual growth in the UK and was the only region to see a fall in average house prices between September and October 2022, while house prices in the North East showed the highest annual growth.”

The North East still had the lowest average house price of any English region, with £168,000 in October, a record high for the region. However, average home prices in the region rose 1.9 percent between September and October, representing the largest increase in average home prices of any region, according to the ONS.

Average property prices in London remained the most expensive of any region in the UK, with an average price tag of £542,000 in October.

But London was the region with the lowest annual house price inflation, with average prices rising 6.7 per cent in the year to October, down from an annual percentage change of 7.4 per cent in September.

The ONS said: ‘London’s annual percentage change was slowed as average house prices in London fell by 0.9 per cent between September and October 2022. London was the only region in the UK where average house prices fell this month.’

Delving into Land Registry data released today, detached houses saw just the third largest annual price increase, with an average increase of 12.4 per cent to £498,885 in England.

Average prices for terraced houses rose 14.7 per cent to £258,717 in England over the period, while prices for semi-detached houses rose 14.4 per cent to around £303,336.

What do experts say about today’s ONS data?

The data published today by the ONS and Land Registry is somewhat out of date, in that figures relating to more recent times have indicated average property prices in the UK are falling amid high inflation and rising interest rates. Mortgage interest rates have reached 6 percent in recent weeks, but are now starting to fall again.

Many experts are not convinced that today’s ONS figures give the full picture of what’s happening in the UK property market right now.

Tom Bill, head of UK residential research at Knight Frank, said: ‘Despite today’s figures, the UK’s double-digit house price rise is now a thing of the past.

“Even as the mini-budget reverberation fades, a more unfavorable credit landscape emerges after 13 years of ultra-low rates.

When the spring market opens in March, mortgage rates will be more than two percentage points higher than at the same time in 2022.

As a result, transaction volumes will remain under control and price falls will occur more often. Knight Frank expects prices in the UK to fall by 10% over the next two years, returning them to summer 2021 levels.

“We think prices in London will continue to underperform the rest of the country, with the exception of key central areas, which will benefit from a higher share of cash buyers.”

Jamie Durham, economist at PwC UK: ‘Given the current economic conditions, there is great uncertainty about the outlook for the housing market.

“But tight household finances, rising interest rates and a likely recession make house prices fall likely in the coming months.”

Meanwhile, Myron Jobson, a senior personal finance analyst at Interactive Investor, said: ‘The 12.6% increase in house prices over the year to October 2022 does not mean that the real estate market is heating up again.

“Instead, it exposes the disruptions caused by the stamp duty holiday — which ended in October 2021 and artificially depressed sales in the months following.”

He added: “The harsh reality is that more and more wannabe buyers just can’t make the numbers work. This is likely to calm home prices after a rapid rise in recent history.”

On mortgage rates, Mark Harris, CEO of mortgage broker SPF Private Clients, said: “If inflation eases to 10.7%, pressure on the Bank of England will ease, but base rates are still expected to rise by half a point this month.

That said, fixed-rate mortgage prices continue to fall, with five-year fixes now falling below 4.5 percent.

“We think they’re moving towards 4 percent as the cost of funds falls, service pressure eases, and lenders look for new business in the new year.”

What has other recent house price data shown?

On Monday, data from Rightmove suggested the average asking price of homes put on the UK market fell 2.1 per cent over the past month, marking the biggest pre-Christmas dip in the past four years.

The UK’s largest property website said the average asking price at the start of December was £359,137, which is about £7,862 less than the previous month. The drop in asking prices followed a price drop of 1.1 percent in November.

But Rightmove added that average asking prices at the end of this year would still be about 5.6 percent higher than a year ago at this time, which would be only slightly less than the 6.3 percent growth expected in 2021. was recorded.

That said, Rightmove predicted a 2 percent drop in prices next year, with “some locations, property types and sectors faring much better than others.”

Tim Bannister, director of real estate science innovation at Rightmove, said: ‘After two and a half years of frantic activity, it’s easy to forget that having multiple bidders immediately lined up to buy your home was the exception rather than the rule in pre pandemic years. , and there will be a period of adjustment for movers as it takes longer to find the right buyer.”

He added: “We are moving towards a more balanced supply-demand balance next year, but we do not expect an increase in foreclosures, which would cause a glut of properties for sale and contribute to larger price declines in 2023.” ‘

On Dec. 7, figures from Halifax claimed annual home price increases slowed dramatically in November to just 4.7 percent, down from 8.2 percent in the 12 months to October.

Monthly house prices also fell 2.3 percent, compared to 0.4 percent last month, according to Halifax. The change means the average home in the UK now costs £285,579, £6,827 compared to £292,406 last month.

Kim Kinnaird, chief executive of Halifax Mortgages, said: ‘The monthly decline of 2.3 percent is the largest since October 2008 and the third consecutive decline.

While a market slowdown was expected given the well-known economic headwinds – and after such high house price inflation in recent years (19 percent since March 2020) – this month’s decline reflects the worst market volatility in recent months.

As we think about the future of house prices, it’s important to remember the context of recent years, when we witnessed some of the biggest house price increases the market has ever seen.

“Property prices are up more than £12,000 compared to this time last year, and well above pre-pandemic levels.”