UK House Prices Drop: Is It Time to Buy?

UK house prices have fallen for the first time since 2012, while rents continue to rise. Is now the right time to buy a house in the UK? Find out more about the current housing market trends and whether it's a good opportunity to invest.

The UK house prices experienced their first annual decline since 2012 in September, while rents surged, indicating the fragile state of the housing market, according to official data from the Office for National Statistics (ONS). The ONS reported a 0.1% decrease in house prices in the year to September, marking the first annual fall since April 2012, following a 0.8% increase in August. In London, prices declined by 1.1%, with the average UK house price standing at £291,000 (€334,079) in September 2023.

The UK housing market which flourished during the COVID-19 pandemic, has been impacted by higher borrowing costs as the Bank of England grapples with the highest rate of inflation among large advanced economies. Mortgage lenders Halifax and Nationwide both noted that house prices continued to decline in annual terms in October, although there was a slight increase in prices on a monthly basis.

Meanwhile, rental prices have been skyrocketing, with the ONS reporting a 6.1% increase in private rents in the 12 months to October, the largest annual rise since data collection began in 2016, up from 5.7% in September. Additionally, separate figures from the Ministry of Justice revealed a surge in the number of no-fault eviction claims in England, reaching the highest level in over seven years. No-fault eviction claims, which enable landlords to terminate tenancies without providing a specific reason and seek court intervention when tenants refuse to vacate voluntarily, surged by 38% in the three months to September compared to the same period last year.

During the pandemic, no-fault evictions were prohibited, and the Renters Reform Bill, aimed at implementing a permanent ban, has faced ongoing delays.

In conclusion, the UK housing market has experienced a significant shift, with house prices seeing their first annual decline in nearly a decade, while rental prices continue to surge. The impact of higher borrowing costs and the ongoing debate surrounding no-fault evictions are contributing to the evolving landscape of the housing market.