October 17, 2023 8:50 am

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Nikka Sulton

New Indicator: House Prices on the Decline. Average house prices in England and Wales are declining at a rate of 2.9% annually, as per the e.surv index. While Yorkshire and Humber and the East Midlands still see price gains, cash buyers are active in higher-value areas.

The average house price in England & Wales stands at £366,348, marking a 2.9% annual decrease, the sharpest decline since 2009, notes Richard Sexton, director at e.surv. Their data, including cash transactions, indicates a £1,122 or 0.3% drop in prices in September, marking the fourth significant monthly decrease in 2023, extending the trend since November 2022.

Despite the decline in house prices, it’s worth noting that they are still higher than when the Bank of England began raising interest rates in December 2021. In terms of regional performance, Yorkshire and Humber, along with the East Midlands, continue to show steady growth in house prices, surpassing other areas. Conversely, the South West experienced the most significant annual price drop, exceeding 2.4% compared to July.

The overall decrease in UK house prices can be attributed to the increased cost of mortgage finance and the strain on disposable incomes caused by the rising cost of living. According to the Bank of England, the country’s major lenders report an average mortgage rate of 5.1% for a five-year fixed mortgage with a 75% loan-to-value ratio, marking the lowest rate since July 2023.

With a pause in base rate increases and heightened competition in the mortgage market, we may witness the return of buyers who postponed their home-moving decisions earlier in the year. However, a significant number of buyers are patiently waiting for mortgage rates to drop further and for the right property to become available. This indicates a pent-up demand for housing that could be unleashed in the upcoming months if market conditions continue to improve.

e.surv’s regional heat map categorizes regions into three clusters. Firstly, there are the two regions along the east coast of England – Yorkshire and the Humber and the East Midlands, where prices continue to rise by 0.4% or more.

Next, we have the light blue regions, the North East and Greater London. These two areas are seldom associated due to their significant differences in average house prices. Nevertheless, they share the common trend of experiencing annual price declines, albeit limited to 0.4% or less.

Finally, the rest of the English regions and Wales are represented in green on the map. In these areas, house prices have seen more substantial drops, with a decrease of 1.7% or greater.


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