UK property portal, Zoopla has just revealed in new figures that UK house prices have fallen in every local property market in the south and east of England this year.
This comes as higher mortgage rates have lessened the demand for new homes and first-time buyers.
Homes by the River Ouse in York. Image: Steve Buckley via Shutterstock
UK property market status
It’s clear the UK property market has remained more resilient than other countries amid higher-borrowing costs and the biting cost-of-living crisis over the last year, however this has resulted in less people being physically able to buy.
In October 2023, UK 30-year borrowing costs hit levels not seen since 1998. This was above the levels since this time last year following Liz Truss’s mini budget. Thee rate rose to 5.115% and is currently at 4.74% at time of writing. (Trading Economics, Nov 2023)
This has affected the number of people able to afford a home loan.
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Falling house prices
About 80% of the UK property market recorded falls in house prices over 2023, compared with last year.
All markets in London, the east of England, and south of England registered falls in house prices. In the rest of England and Wales, more than half of the market saw declines, while just under two-fifth of markets in Scotland registered falls.
It wasn’t long ago that we reported the percentage of cash buyers has swelled. Read more about that on UK Property Guides.
Despite seeing drops in most areas across the country, the average house price across the UK increased to £281,973 in October from £278,985 in September.
Speaking about the house price balance, which measures the gap between the percentage of respondents seeing the fall and rise in house prices, the Royal Institution of Chartered Surveyors (RICS) said, ‘Looking ahead, house prices are expected to fall further both in the three and twelve-month timeframes (net balance readings stand at -41% and -43% respectively).’ (RICS, via Trading Economics)
A row of houses in Crouch End, London
Looking ahead to 2024
Just a few days ago, the Office for Budget Responsibility (OBR) forecast that UK house prices will fall by 4.7% in 2024.
In its Economic and Fiscal Outlook report, the OBR predicted the average British home will be worth £266,000 by the end of 2024.
Applying that 4.7% decrease to London, where the UK property market is more expensive to get on the ladder, the September 2023 average price of £537,000 would see it fall to £511,761 by the end of 2024.
The report said, ““The outlook for house prices is particularly sensitive to changes in interest rates and household income growth,” the report said.”
However, the OBR forecast that it will until 2027 for the UK property market to recover to 2022 peak levels. (OBR, November 2023)
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