The UK national average house price has fallen between 4-6% since reaching an all-time high during the final quarter of 2023. Depending on what Index you refer to, the actual amount that house prices have fallen is debatable. On one end of the scale, Rightmove, who’s index is based on advertised prices, reported a modest fall of 0.5% since the same time last year. When in reality there is currently a stark difference between what prices sellers are asking for and what price is actually agreed when negotiating with a buyer.
These days a lot of houses are being sold at around a 10% discount to the the asking price and to find out what prices are actually being achieved Land Registry Data is the most reliable source, the only problem being is that The Land Registry always reports figures from a couple of months ago so the data is far from up to date. The last reported figures show that the average house price in June was £288,000 and is £5000 lower than the peak that was reported in November 2022. This shows a fall of 1.74% but you must bear in mind that it is likely that prices have fallen further during the past couple of months and we will need to wait a couple of months to see what prices currently are for this month.
Why Are UK House Prices Falling
For those who wish to speculate on house prices falling and time the market, it is of course important to realise why they have fallen so far and what may cause prices to fall further. It’s no hidden secret that the main reason for falling house prices is the increase of interest rates. Over the past year we have all experienced price increases at the supermarket and in July we saw a reported increase of 14.8% in the cost of food.
In an effort to bring inflation down the government has also made the cost of borrowing more expensive so that the population spends less at the stores and that will keep prices more competitive. However, for your average home buyer this results in a double squeeze, nowadays not only can buyers afford less because of their increased mortgage costs, but they are also spending more on goods and services and will therefore pass a lower affordability criteria with the lenders. There is also a mortgage ticking time bomb, where millions of people have expiring fixed rate mortgages that were previously cheap and now they are reverted to an expensive standard variable rate which is currently around 6.99%.
Those who are experiencing the sand running out on their current cheap mortgage may be forced to sell their house quickly at a lower price in an effort to cash out before they are switched to a rate that they simply can’t afford. Other than using an estate agent or auction there are online companies like Direct House Buyer who can buy your house, each month they update statistics about the property market to determine if it is the right time to sell your house or if you are a house buyer, if it’s the right time to buy.
When Will Prices Fall the Furthest
It is expected that November’s figures that will be reported by The Office of National Statistics will show the most dramatic decline that we will see this year and there is good logic behind this. Seeing that The Land Registry recorded an all time record national house price for November 2022, when compared annually and factoring the price declines that we have seen for this year, November’s figures should in theory show the most dramatic fall from high to low that we have seen so far. It would be no surprise that when this figure is reported it will make some concerning headlines in the press which may cause further panic from sellers, and buyers may be able to achieve a further discount during that time. Therefore, November could be a good time to buy a house but there is no guarantee that it will be at the bottom of the market.
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