The average cost of a home fell by £6,000 a year in November to £285,000, data from the Office for National Statistics (ONS) have revealed, the fastest fall in over 12 years.
When broken down by nation, property prices fell by 3 per cent in England to an average of £302,000 and by 2.5 per cent in Wales to £213,000.
In Scotland prices rose by over 2 per cent to £194,000 and by 2.1 per cent in Northern Ireland to £180,000.
At the same time, the ONS also said private rental prices paid by tenants in the UK rose 6.2 per cent in the 12 months to December 2023, the joint highest rise recorded since records started in January 2016.
Aimee North, head of housing market indices at the ONS, said: “The annual fall in house prices continues to accelerate, with the average cost of a home falling at its fastest rate for over 12 years. “Meanwhile annual rent increases remain at record levels across the country.”
Property ‘overpriced’ in south-east
Gareth Lewis, managing director of property lender MT Finance, said the UK’s property market was just bumbling along, with no hugely noticeable decreases in values.
He said: “The largest falls are in the south-east because in reality those properties are more likely to have been overpriced and probably still are.”
“If people are looking to buy property as an investment, they will go where there is a return on yield and choose areas which fit affordability from a buy-to-let perspective.”
“Until we see more people wanting to transact and buy properties, the market is likely to bumble along without too much movement either way.”
Anna Clare Harper, chief executive of sustainable investment adviser GreenResi, said :“While average rents paid by tenants in the UK rose by 6.2 per cent might not seem like much, with inflation of 4 per cent, however, this statistic underestimates the reality faced by renters.
“For the one in four renters who move each year, rental price increases are often twice as high.
“This is a huge problem: financial security is very difficult to achieve in a context of double-digit price rises for the largest household expense.”
“Worse still, affordability is just one of the problems facing Generation Rent. There are not enough homes – rental supply is down 28 per cent in the past 18 months.
Ms Harper said the quality of rental homes was inadequate, adding that 23 per cent of private rental sector homes fail to meet the decent homes standard.
“The problems of pricing, volume and quality of supply facing renters across the UK require professional investors to step in to solve them, since traditional sideline private landlords with fewer than five properties in their personal names – who made up 82 per cent of the market at the point of the last English Private Landlord Survey – exit in droves,” she said.
Jeremy Leaf, north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: “Shortage of stock, partly caused by landlords leaving the sector in response to worries over the tax and regulatory regime, while at the same time demand seems unstoppable.
“However, in the early weeks of 2024, we have noticed an increase in supply which has helped to keep a lid on some of the more ambitious rents and the gap with demand is narrowing.”
Karen Noye, mortgage expert at Quilter. said it could be a difficult to get an accurate picture of how the housing market is faring as house price indices from lenders such as Halifax have painted a considerably more positive picture in recent weeks.
“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,” she said.
She added: “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.”