House prices down 3.3% annually in October, according to Nationwide's HPI

House prices in October are down 3.3% on last year's figures, according to Nationwide's House Price Index (HPI).

Despite experiencing a 0.9% monthly increase from September, the current average house price (£259,423) is significantly below the peak shown in August last year (£273,661).

As well as declining annual housing market prices, housing market activity is also struggling with mortgage approvals also revealed to be 30% below the peak shown in 2019.

'How much is my house worth' may be crossing your mind at the moment — here's what you need to know about house prices in the UK.

'Housing market activity has remained extremely weak'

The annual decline in house prices and housing market activity is reflective of the struggles of the housing market in 2023.

Robert Gardner, Nationwide's Chief Economist, said: "Housing market activity has remained extremely weak, with just 43,300 mortgages approved for house purchase in September, around 30% below the monthly average prevailing in 2019.

“这不足为奇,因为购买力仍年代tretched. Market interest rates, which underpin mortgage pricing, have moderated somewhat but they are still well above the lows prevailing in 2021."

He explains that the monthly rise in house prices in October can be explained by the "constrained" market and that there is "little sign of forced selling, which would exert downward pressure on prices" and has therefore prevented even further annual declines in prices.

Subdued rise in asking prices

House prices have experienced their lowest increase in October since 2008, according to Rightmove's HPI.

Prices rose by 0.5%, but this is considerably below the 20-year average of 1.4% at this time of year with the final quarter of house prices regularly seeing the largest increase in prices.

Sc主任蒂姆·班尼斯特Rightmove的属性ience, stated: "New seller asking prices have seen a rise, as they usually do at this time of year following the summer holiday season.

"While this year's much more subdued rise indicates that some new sellers are gradually heeding their agents' advice to price competitively, agents report that other sellers still need to adjust their expectations on the price that they are likely to achieve in the current post-pandemic, lower-activity market, where six in ten homes are now selling rather than eight in ten."

Struggling market blamed on interest rate rises

Rising interest rates and comparatively buoyant markets a year ago have been blamed by industry experts for the continuing poor performance in house prices.

Kim Kinnaird, Mortgages Director atHalifax Mortgages, stated: “It’s fair to say that house prices have proven more resilient than expected so far this year, despite higher interest rates weighing on buyer demand. However, there is always a lag-effect where rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs flowing through to house prices.

"Increased volatility month-to-month is also to be expected when activity levels are lower, though overall the pace of decline remains in line with our outlook for the year as a whole."

Robert Gardner supported this view, claiming: “Activity and house prices are likely to remain subdued in the coming quarters. Despite signs that cost-of-living pressures are easing, with the rate of inflation now running below the rate of average earnings growth, consumer confidence remains weak and surveyors continue to report subdued levels of new buyer enquiries.

“With Bank Rate not expected to decline significantly in the years ahead, borrowing costs are unlikely to return to the historic lows seen in the aftermath of the pandemic."

Will house prices rise or continue to fall in 2023?

According to Rightmove's data for September, new home seller prices went up slightly by 0.4% this month to £366,281, which is lower than usual for this time of year.

The yearly price change has dropped to -0.4%, the biggest drop since March 2019. This decrease is due to slow activity caused by higher interest rates and summer holidays, leading to more price reductions than we've seen since January 2011.

Currently, 36.3% of properties for sale have reduced prices, with an average reduction of £22,700 (6.2%). In August, the number of property sales dropped by 18% compared to August 2019. However, the first-time buyer sector, particularly homes with two bedrooms or fewer, performed relatively better with a 13% decrease compared to 2019.

However, there are some positive signs as the market begins to pick up. The number of new properties entering the market increased by 12% in the first week of September compared to the average weekly number in August.

Robert Gardner suggested: "Investors have marked down their expectations for the future path of Bank Rate in recent months amid signs that underlying inflation pressures in the UK economy are finally easing, and with labour market conditions softening.

"This in turn has put downward pressure on longer term interest rates which underpin fixed rate mortgage pricing. If sustained, this will ease some of the pressure on those remortgaging or looking to buy a home."

Experts also predict that this trend of falling house prices will continue throughout the year, however, performance will be reliant on Bank Rate rises.

Kim Kinnaird stated: “We do expect further downward pressure on property prices through to the end of this year and into next, in line with previous forecasts.

"While any drop won’t be welcomed by current homeowners, it’s important to remember that prices remain some £40,000 (+17%) above pre-pandemic levels. It may also come as some relief to those looking to get onto the property ladder.

"This is the most affordable level since June 2020, and will be partially offsetting the impact of higher mortgage costs.”

What does this mean for mortgages?

The current state of the mortgage market has created an atmosphere of uncertainty among potential homebuyers, with more changes expected in the coming week.

Mortgage rate riseshave been caused by the Bank of England's (BoE) decision to raise the Base Rate to 5.25%, which was made after inflation rises.

However, as inflation rates are beginning to lower the BoE announced in September that the Base Rate would not rise, the first time in 14 this had not risen, providing relief to those looking to secure a mortgage.

There is also some improvement in buyer affordability as mortgage rates continue to fall. The average five-year fixed mortgage rate is now 5.67%, down from its peak of 6.11% in July.

Tim Bannister claims: "Mortgage rates continue to trend in the right direction and have now dropped for 11 consecutive weeks, with buyer affordability gradually improving compared to this time a year ago.

"Those with a larger deposit have seen the biggest benefit from recent rate drops, with rates for those with a smaller deposit, typically those further down the housing ladder, not dropping as quickly.

"The mortgage market is much more stable right now compared to three months ago, giving movers a little more assurance over the rate they are likely to be offered and therefore what they are likely to be able to afford. Those looking to secure a new home for the new year should apply for a Mortgage in Principle to work out what they could afford, and listen to local estate agents about what's happening in their local housing market."

What does this mean for those wanting to sell?

Despite this relatively restrained rise in asking prices, buyer activity remains notably lower than the frenzied post-pandemic market, according to Rightmove.

Compared to the same time last year, the number of agreed sales has declined by 17%, and the proportion of homes securing a buyer and being marked "Sold Subject To Contract" has dropped from eight in ten during the peak of the frenzy to six in ten presently.

Buyers are active, particularly when the right property at the right price becomes available, but agents advise sellers to capture buyer attention by setting a competitive price from the outset.

According to Rightmove's analysis, commencing with a higher price and later reducing it significantly diminishes the chances of a successful sale. However, many sellers are struggling to adapt their pricing strategies in this more challenging market.

Tim Bannister said: "In a market that agents describe as the most price-sensitive ever, buyers are likely to be on the look-out for homes that they feel represent excellent value, and to attract one of these motivated buyers, sellers need to price right first time.

"If similar nearby properties for sale appear overpriced, serious sellers have an opportunity to stand out from the crowd with a more competitive price and attract immediate buyer interest that our research shows significantly increases the likelihood of finding a buyer."

I’m buying/selling a house, what do I need to know?

The recent slowdown in consumer price inflation was not as significant as anticipated, leading to increased expectations for future Bank Rate increases, according to Nationwide.

Kim Kinnaird supports this view, claiming that the high consumer price inflation has caused market expectations of multiple rate increases, as the Base Rate rose to 5.25%. As a result, fixedmortgage rate increasesbecome common throughout the market.

She stated: “Market activity levels slowed during August, and while there is always a seasonality effect at this time of year, it also isn’t surprising given the pace of mortgage rate increases over June and July. While these did ease last month, rates remain much higher compared to recent years.

However, she also claimed: "The market will continue to rebalance until it finds an equilibrium where buyers are comfortable with mortgage costs in a higher range than seen over the previous 15 years."

For buyers, thestamp duty cutannounced within the mini-budget in September 2022 means that the threshold for stamp duty exemption in England and Northern Ireland has been lifted from £125,000 to £250,000.

For first-time buyers, who previously paid no stamp duty on the first £300,000, that figure has gone to £425,000.

Those planning on buying a house can take a look at ourhouse viewing checklistas well as look at our guide on建筑的调查.