UK House Prices Fall for Second Month in a Row, London Leads the Decline

Official figures reveal a 1.2% drop in UK house prices over the past year, with London experiencing the largest decrease. Despite this, the average home remains significantly more expensive compared to previous years.

UK House prices experienced a decline for the second consecutive month in October, as per the latest official figures. The Office for National Statistics (ONS) reported a 1.2 per cent drop in house prices over the 12-month period leading up to October, with the average UK home now valued at £288,000, which is £3,000 lower than the previous year. Despite this, the average home remains significantly more expensive, with a £58,000 increase (25 per cent) compared to April 2020. However, the pace of house price growth has slowed considerably since July last year, when annual prices rose at a rate of 13.8 per cent.

It is important to note that the ONS house price index, which utilizes Land Registry data, is based on the average sold price of the average property. However, due to the lengthy nature of property transactions, it may not accurately reflect the current state of the housing market. Other house price indices from Nationwide and Halifax, which track the value of their mortgage transactions, have reported an increase in house prices over the past two months. On the other hand, Rightmove, which monitors newly listed asking prices, has observed a 1.9 per cent decrease in asking prices this month, following a 1.7 per cent fall in November.

The behavior of house prices varies across different regions, with London experiencing the largest decline of 3.6 per cent in the 12 months leading up to October, while the North East saw an average price increase of 0.2 per cent during the same period. Looking ahead to the next year, there is optimism for home buyers, movers, and sellers, as mortgage rates have been decreasing in recent months, with the best rates now almost 1 percentage point lower than the Bank of England base rate of 5.25 per cent.

It is worth noting that the ONS has highlighted a considerable decrease in transaction volumes available to calculate the house price index, which may result in larger-than-usual revisions over the coming months.

The housing market in the UK has experienced a decline in house prices, with varying trends across different regions. Despite this, there is optimism for the future, particularly for those involved in property transactions.