The average London house price is down £1,612 month-on-month in October, according to Halifax.This bucked the national trend across the UK where house prices jumped by around £3,000 month-on-month in October – marking the first monthly increase since March. An average home in the capital cost £524,057 in October, compared to £525,678 in September.
Compared to this time last year, London house prices have dropped by 4.6 per cent.
The typical UK home was valued at £281,974 in October, up by about £3,000 on the previous month.
In September, the average UK house price was £278,985.
"We expect house prices to fall further overall"
Overall the housing market remains subdued, as homeowners are unwilling to sell in the current market unless they have to.
This has led to less homes being put on the market, the bank said.
“Prospective sellers appear to be taking a cautious attitude, leading to a low supply of homes for sale," said Kim Kinnaird, director, Halifax Mortgages.
"This is likely to have strengthened prices in the short-term, rather than prices being driven by buyer demand, which remains weak overall," she added.
“While many people will have seen their income grow through wage rises, higher interest rates and wider affordability pressures continue to be challenges for buyers."
Last week the Bank of England held the base rate at 5.25 per cent, but it is not expected to fall any time soon.
"We expect house prices to fall further overall – with a return to growth from 2025," said Kinnaird.
“The current picture should continue to be seen in the context of the longer-term house price trend as, on average, prices remain around £40,000 above pre-pandemic levels.”
"We are not getting carried away with the modest rise in prices"
Jeremy Leaf, a north London estate agent said: “We are not getting carried away with the modest rise in prices shown here. Transactions remain subdued so looking forward we don’t expect to see much improvement in the market until January or February of next year as the earliest.”
Tom Bill, head of UK residential research at estate agent Knight Frank, said: “Thin trading means monthly price movements should be handled with care but price falls have been kept in check by the hesitancy of both buyers and sellers.
“It means this slowdown has been a story of weak sales volumes, not fast-declining prices. House prices will continue to come under pressure but we think they will bottom out in 2024.
“We expect a decline of 7 per cent this year and 4 per cent next year as inflation comes under control and mortgage rates stabilise.”
Halifax said that, against a backdrop of rising rents, the first-time buyer market has held up relatively well.
"First-time buyers are definitely on the rise"
The report said the latest house price data shows prices for first-time buyers are down by 2.4 per cent annually, a notably smaller fall than the market generally (a 3.2 per cent fall), over the past year.
Ross McMillan, director at Glasgow-based, Blue Fish Mortgage Solutions, said: “In Scotland, first-time buyers are definitely on the rise but many are now planning their house-buying for early 2024 rather than rushing for a pre-Christmas purchase.
“Many believe that the Bank of England’s rate hold last week suggests rates may have peaked and it’s this hope, rather than any national price data or forlorn expectations of house price crashes, that is currently boosting confidence in the Scottish property market.”
Halifax’s findings are similar to those of Nationwide Building Society, which reported last week that house prices rose by 0.9 per cent on average month-on-month in October. The society said last week that this likely reflected a constrained supply of properties for buyers to choose from.
The Halifax report showed that annual price falls in October ranged from 6.0 per cent in the South East of England, where house prices are often higher than in many other parts of the UK, to just 0.2 per cent in Scotland.
“After last week’s Nationwide house price curveball, we’ve got another" said Stephen Perkins, managing director at Norwich-based broker Yellow Brick Mortgages.
“The lack of supply is certainly pivotal to these upticks in house prices but demand is also picking up as more and more buyers sense a bargain. First-time buyers, in particular, are in a strong position and know that they hold a lot of bargaining power at present.”
"There are green shoots of hope for would-be buyers"
Myron Jobson, senior personal finance analyst at interactive investor, said: “Buying a house in today’s market remains difficult.
“The new status quo of higher mortgage rates means that sellers might need to be flexible on price, while prospective buyers should ensure that they don’t bite off more they can chew financially to land a property.
“But there are green shoots of hope for would-be buyers. Wage growth now outpaces inflation, while home prices and mortgages rates are tipped to wane further. Over time, that combination should improve affordability for potential buyers – but there are no guarantees.”
Iain McKenzie, CEO of the Guild of Property Professionals, said: “Sellers should be reassured by the stability in house prices we are currently seeing. While you may not receive the same offer you would have this time last year, properties are still worth considerably more than pre-pandemic levels.”
Purplebricks CEO, Sam Mitchell, said: “Banks are increasingly competitive in the rates offered to consumers, causing an increase in activity that, while perhaps too late to affect this year’s data dramatically, bodes well for a good start to 2024. After a difficult year, customers and estate agents alike can be optimistic about the state of the sector.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “While lenders are on the look out for potential headwinds which might impact mortgage pricing, on the whole they are much more confident than they have been in recent months.
“There is much less volatility in the cost of funds with Swaps, which underpin the pricing of fixed-rate mortgages, continuing to edge downwards.
“The second rate hold has increased speculation that base rate may have peaked, although even if this is the case, interest rates are unlikely to start declining for a while yet.”
