House prices rose in the UK in November by 0.2% according to Nationwide, with annual growth running at -2%. This was the third successive monthly increase and resulted in an improvement in the annual rate of house price growth to -2.0%. While this remains weak, it is the strongest outcome for nine months. Halifax similarly reported a 0.5% rise in November with annual house price growth of -1%.
Values have fared better this year than many predicted. Rightmove forecasted prices would drop by 2% in 2023, although they recently reported prices are currently 1.3% lower year-on-year. Some sellers have put off moving under the current circumstances resulting in stock shortages in some sectors, creating a lack of choice for buyers, which may be cushioning the predicted decline of values.
Alex Bannister an Independent Economist and former Director of Future Ventures, Nationwide Building Society, sums the current situation up well- “The UK residential property market remains characterised by subdued activity levels with 10% fewer homes changing hands each month compared with pre-Covid norms. Given the rise in interest rates, which now appear set to remain around 5%* for a sustained period, it is unsurprising that house prices have also reduced. Despite the gloom, lower asking prices and rising incomes are dampening the impact of higher rates on affordability at a time where rents are surging due to low supply suggesting house purchase remains attractive.”
Our own experience is largely positive with a run of high value completions in the summer between £1.6 million and £6 million and several agreed sales between £350,000 and a £1 million in the last twelve weeks. We have seen strong interest in a development in Ripon with three of the five new houses selling in the early stages of marketing, and a village house in The Dales sold within a week with a guide of £895,000.
The key to selling in 2024 will be down to responsible pricing. The exponential price growth we saw at the top end of the market in Summer 2022 is a thing of the past as a lot of the post Covid buyers have come through the system, and the cost of borrowing has spiralled. However, it is a fact that buyers are now having to accept that the “cheap” money they were used to is a thing of the past. It is worth noting that from 1995 until 2022 the average interest rate in the UK was 5.62%. It is likely we will see further falls of house prices over the next 12 months, but looking at some of the more reliable pundits these should not be excessive.
Ben Pridden comments- “I have seen a lot of turbulence around the UK housing market over nearly 30 years in the business. It seems to me that the downward pressures we are experiencing are not likely to result in a crash. There is invariably a disparity between supply and demand in the prime markets in favour of sellers- as long as agents keep a grip on reality when considering pricing, I see no reason why the best houses will continue to sell well in 2024. We have always aspired to promote best in class homes in our market place, which has served us well over the last three and a half years since I started the agency side of our business.”