Following the latest ONS House Price index update that showed that average UK house prices decreased by 2.1% in the 12 months to November 2023, down from a decrease of 1.3% in the 12 months to October 2023, industry experts have reacted.
Tony Hall, Head of Business Development, Saffron for Intermediaries: “When looking at today’s ONS house price index, it is important to remember that it represents data from November 2023. In an ever changing market, two months is a long time, and we are seeing a much more positive picture now than this data suggests.
“Less volatile swap rates and a measured approach to the base rate from the Bank of England is encouraging competition among mortgage lenders and driving prices down. This in turn is encouraging aspiring homeowners and movers into action and driving market activity. Rising confidence has already been reflected in recent Rightmove data, which suggests that average house prices have gone up this month too.
“That being said, as borrowers look to navigate the evolving market, it is important that advisers are on hand to guide them. Many will be looking to their adviser for reassurance and support, and it is important for industry professionals to ensure that everyone is able to find the best possible deal tailored to their individual needs.”
Tony Silver, Director at White House Mortgages Ltd, said: “I urge extreme caution when reacting to ONS Price Index data.
“Property should always be seen as a long term asset, whereas the ONS Price Index looks closely at short term periods. Over the life of a mortgage, most properties tend to go up in value, however over the life of a mortgage product, particularly at the present, external forces have led to a period of volatility and an overall downwards trend. Unfortunately, the general public react to the sound bites that they hear on the News and read from so called experts from various Estate Agents. Never forget that Estate Agents are salespeople, whilst Mortgage Brokers are advisers. Choose the right product for the client’s personal situation, and urge caution when reacting to ONS Price Index Statistics.
“Clients need to know and understand their areas and property types, in the same way that we need to understand and advise our clients.”
Richard Dana, CEO at Tembo Money said: “2023 was certainly challenging for the UK housing market. In addition to the price declines, there was also an estimated 25% decline in volumes – so people are just not selling their homes because they don’t want to accept the lower prices. Fundamentally, people need somewhere to live and first time buyers want to get on the property ladder, so it feels like there is a build up of demand as we start 2024. With rates starting to trend down from their recent highs – it certainly feels like there might be some more life in the UK property market in 2024.
Matt Surridge, Sales Director at MPowered Mortgages, comments: “Today’s figures reflect the higher borrowing costs and the cost-of-living crisis, which deterred buyers in the second half of 2023. However, as we enter the new year, the outlook is decidedly more optimistic than before. Thanks to less volatile swap rates and more stable interest rates, the market thoroughly favours buyers—a welcome change for those looking to purchase and something which should drive activity.
“That being said, we still expect house prices to stay on a gradual downward trend over the coming months due to elevated interest rates and stretched affordability. For brokers, the task now will be to help borrowers do thorough research, and ensure they are only making commitments they can afford over the long-term. Buying a house is one of the most important financial decisions many borrowers will make in their lifetime, and brokers must use their experience to help bring perspective to the situation to prevent any rash decisions from being made.
“In a challenging market, MPowered’s AI-powered solutions are specifically designed to help make the mortgage process as streamlined as possible, giving control back to consumers, and ensuring they have the very best chance of finding a product that works for them.”
Arjan Verbeek, CEO of Perenna said: “Although house prices have fallen, the market remains challenging for aspiring homeowners. While some mortgage providers have made attempts to attract new buyers by offering low short-term fixed rates, these will not improve affordability or peace of mind for consumers in the long-term.
“The UK’s reliance on short-term fixes is part of the problem, due to how risk affordability is calculated by lenders. If the risk is mitigated away from borrowers, and lenders know what homeowners will continually pay in 10, 15, or even 20 years, it could open up affordability significantly and allow many more to buy a home. It’s why long-term fixed rate mortgages are being seriously considered and discussed by both Labour and Conservatives ahead of the next general election – to allow more individuals to buy with smaller deposits. European counterparts such as Germany, France, and the Netherlands rely on mortgage banking models which are long-term and fairly priced. It’s a proven model.
“The market remains volatile; quick-fix, short-term solutions aren’t the answer. A truly affordable UK market requires structural change and a revolution.”
Richard Harrison, Head of Mortgages, Atom bank comments: “On the face of it, an annual drop of 2.1% paints a gloomy picture for the market, however there may be a slight lag compared to other house price indicators which are leaning towards a more positive outlook. Earlier this week, Rightmove indicated that the property market is gathering momentum, with average asking prices at the start of the year increasing at the highest rate since 2020, while the number of sales agreed was 20% higher during the first week of January than the same period last year.
“The start of the year has seen a so-called price war, with many lenders making significant rate cuts to win business. Cheaper mortgages will no doubt encourage buyers to see what’s out there, which should help to underpin property prices. If this demand helps to attract new vendors, the return to greater liquidity will be more good news for the economy and should build a growing sense of confidence as we move towards an election later this year.”
Jason Ferrando, CEO of easyMoney commented: “A slight seasonal reduction in sold prices is unlikely to dent the improving market sentiment that we’ve seen develop in recent months and there’s no doubt that buyers are returning buoyed by a freeze on interest rates.
“However, they are advised to do so with a degree of caution. While mortgage rates are reducing, swap rates have been creeping up in January which suggests that this reduced level of mortgage affordability may not hang around for long.
“Those looking to buy are best not to overborrow as this could cause them financial difficulty further down the line when they come to renew.”
Ruth Beeton, co-founder of Home Sale Pack, commented: “Despite today’s reduction in house prices, market conditions have certainly improved and an increase in mortgage approvals suggests more buyers are now returning to tentatively dip their toe, even though interest rates remain at their highest since 2008.
“While this uplift in market activity is, of course, a positive for the nation’s sellers, the current market landscape remains a challenging one and transaction timelines are still significantly longer than we’ve seen previously.
“Proactive sellers stand the best chance of securing a buyer and progressing their sale at speed and this involves getting your house in order from the very start when it comes to the paperwork required, as well as taking a realistic approach during the negotiation phase based on today’s market values.”
CEO of Open Property Group , Jason Harris-Cohen, commented: “The market has stood fairly firm over the last year despite wider economic turbulence, but we’re yet to see any improvement in property values and it may be some time before we do.
“Higher interest rates are still dampening buyer sentiment and not only is it taking far longer for sellers to secure a buyer in a proceedable position, but the path to completion is also taking considerably longer.
“So while home sellers entering the market may still secure a good price, those looking to sell their home quickly are likely to be disappointed.”
Co-founder and CEO of GetAgent.co.uk, Colby Short, commented: “Although we may have seen an uplift in front end market activity in the run up to Christmas, both in the form of mortgage approvals and mortgage approved house prices, this growing positivity is yet to filter through to actual sold prices.
“Of course, it’s only a matter of time before it does and so while a seasonally influenced drop in property values may seem like bad news, we fully expect this trend to reverse as the market gets back up to speed in 2024.”
CEO of Yopa, Verona Frankish, commented: “Sold prices are always the last indicator of market health to show improvement and so while they remain down, this certainly isn’t a sign of an impending market crash, more the final days of a previous period of stagnation.
“In fact, we’ve already seen evidence that the market is starting to improve and not only are buyers returning, but we’ve seen thousands of sellers return to the market already this year who previously failed to secure a buyer in 2023.
“With momentum building on both sides, it won’t be long before this uplift in activity helps to push sold prices in the right direction.”
Director of Benham and Reeves, Marc von Grundherr, commented: “There’s been an air of positivity hanging over the UK property market for a number of months now and this is unlikely to evaporate due to a marginal decline in sold prices.
“Not only is there a seasonal influence at play with today’s figures, but what we’re seeing is a return to the norm following a pandemic inspired period of house price boom.
“The market is currently finding its feet as buyers adjust to the reality of higher mortgage rates, while sellers are also having to adjust their expectations and as the two meet in the middle, we expect the market to stabilise.”
Nathan Emerson CEO Propertymark comments: “A drop in house prices is inevitable and natural when finding a balance in affordability during turbulent economic times. We want to see affordability further improve for homeowners and in order to achieve that, inflation rates will need to get closer to the government’s two per cent target, which in turn will impact the Bank of England’s ability to begin reducing interest rates from February onwards.
“We would also hope the UK Government looks at options to increase housing supply in a market in order to keep up with growing demand.”
Malcolm Webb, FRICS, Technical Director at Legal & General Surveying Service, comments: “The mortgage market is kicking off the new year with some healthy competition, making it a really exciting time to work in this space. Average mortgage rates on two- and five-year fixed-rate deals have fallen for a fifth consecutive month, with many of Britain’s biggest banks currently offering a 5-year fix below 4%. Alongside rates dropping, mortgage product availability is also heading upwards, and you currently have over 2,200 more options to pick from than you did in January last year. The shelf life of these products – i.e. how long they are on the market – has also improved dramatically. First-time buyers will also be pleased to hear that the availability of 5% deposit products has also risen to the highest level since September 2022.
“There’s every hope this will spark renewed interest from buyers to boost transactions, and help solidify house prices. The average UK house price is very comparable to this point last year, but there are huge regional variations to consider, so it’s always worth doing your homework on your particular area to understand the trends. With changes to mortgage pricing, affordability, and criteria, all coming thick and fast, it’s a good time to consult a qualified mortgage adviser before opening your purse or wallet. Advisers are trained to understand all the complexities of the fast-moving market, and guide you towards the best solution for your situation and needs. Buying a home is often the largest financial commitment you will make in your life, so it’s vital that you have an expert by your side during the process.”
Karen Noye, mortgage expert at Quilter: “The latest government house price index reveals prices saw a 0.8% drop in November compared to the month prior, and an annual price fall of 2.1% drop in the 12 months to November. This leaves the average property in the UK valued at £285,000.
“This annual decrease of 2.1% is a notable uptick compared to the 1.3% decrease seen in the 12 months to October, suggesting house prices have been further worn down by the challenging economic circumstances. However, it is worth noting that though it can be a difficult to get an accurate picture of how the housing market is faring, house price indices from lenders such as Halifax, which provide a more up to date view of the market, have painted a considerably more positive picture in recent weeks.
“Last year was incredibly challenging for the housing market, and cost of living pressures and high interest rates saw a marked decrease in the number of property transactions which had a knock-on effect on house prices. Though this morning’s data points to a downturn in prices, the housing market still appears to have coped relatively well overall given this is a far smaller fall than had been predicted in the wake of the Truss mini budget.
“There is a now sense that the property and mortgage markets have come through the worst of the turmoil of the past few years and as we look ahead to the rest of 2024, cautious optimism remains. Lenders have been consistently reducing their mortgage rates as swap rates have lowered, and reduced transaction levels have fed into a healthy competition between lenders which have been left battling for business.
“In the coming months, we may see more prospective buyers lured back to the market which could buoy prices, particularly if mortgage rates continue to fall. The surprise uptick in inflation this morning may mean the Bank of England maintains its ‘higher for longer’ stance for a little while longer, but rate cuts are widely expected to materialise as we move further into 2024 and those looking to secure a fixed rate mortgage could find that deals become increasingly more palatable. However, those with long term deals from the period of very low interest rates ending this year will find they are still faced with a considerable jump in their payments. Those looking to remortgage or purchase a new home this year would benefit from seeking professional mortgage advice to ensure they are making the best possible decisions for their personal circumstances.”