Fastest house price fall since 2009...really?

(Last Updated: 13/10/2023)
8 min read

Average House Price London (July)


Sales Volume London (May)


Average House Price England & Wales (July)


Sales Volume England & Wales (May)

Key Takeaways for September 2023

  • Property sales fall by 46% year on year for England and Wales
  • House prices remain close to record highs in England and Wales up to July; whilst Nationwide reports falling house prices for September
  • Bank of England maintains base rate at 5.25%
  • Property Mark report "The average number of new buyers registered per branch is up to 81 in August from 64 in July" & "The supply of new homes placed for sale per member increased to 13 per branch in August".
  • Mortgage approvals for home purchases down 37% YOY and remortgages down 49% up to Aug
  • Labour pledges to build 1.5 million new towns and villages for the next 10 years
  • New build starts highest quarter for over 40 years

UK house prices fell at the fastest rate since 2009 over the 12 months to September, according to data from Halifax; although according to the most recent Land Registry data up to July, house prices remain close to the record high for England and Wales. Halifax said house prices were 4.7 per cent lower last month than in September 2022, compared with a 4.5 per cent annual fall in August. This is echoed this week as Savills reported UK house prices have fallen by 2.8 per cent in nominal terms since their peak in March 2022, but 13.4 per cent in real terms.

If house prices are falling, then the Bank of England gave further good news for the housing market by not increasing the base rate to 5.5% in their September meeting. Whilst there is no increase, the base rate is anticipated to stay higher for longer. As flagged in our July 2023 Report, 5% is a normal base rate for lending and home buyers affordability will need to adjust as the days of under 2% are a thing of the past.

One way to make a mortgage more affordable is to repay it over a longer term. The Bank of England highlighted a potential concern with the number of homeowners taking out mortgages with a term of 35 years or longer. In its Financial Policy Committee (FPC) report it shows an increase from 4% in the first quarter of 2021 to 12% in the three months to June 2023.

The housing market could benefit from a flow of new housing stock if Labour wins the next general election. Labour leader Keir Starmer spoke at the party conference announcing a new generation of large towns and suburbs in areas with high growth. Projects would be carried out by state-backed companies with compulsory purchase powers. There would also be a cap on what landowners can charge. Local amenities such as doctors’ surgeries, schools and transport links will be a key part of the plans.

A pledge of 1.5 million new homes in 10 years gets my vote, but is this just pie in the sky or will the housing market get the stock injection it needs to galvanize the market? Plus, with London, Manchester, Birmingham and Liverpool all areas for development, this is an exciting prospect.

Source: Office for National Statistics (ONS)

What our survey revealed about homebuyers
Our survey, conducted by YouGov, reveals the top challenges faced homeowners when buying their most recent property, plus the true costs of defects when skipping a home buyers survey.

What are homebuyers looking for?

First-time buyers are falling

The Halifax are predicting that first-time buyer numbers will fall by more than a fifth in 2023, according to their new transaction data. The mortgage lender estimates that about 186,000 people will buy their first home in 2023. Halifax has stated it feels the drop is directly linked to housebuilders and estate agents requiring bigger loans-to-value.

So far this year, the biggest drop in the number of people buying a property for the first time is 25 per cent in the south-east, followed by 24 per cent in London and East Anglia.

Second lowest sales volume for May

London Property sales fall by 50%. A Cartoon of a man trying to hold up the property market with ropes

London has the second lowest volume of sales for the month of May since records began; the lowest was during Covid when the housing market was placed on freeze by the Government. Whilst volume increased month on month by 10% to 3,615, this is 48% down on last year's 6,956.

The Halifax's and Savile's reported falling house prices don't seem to be happening in London, as the most recent Land Registry data shows year-on-year increases since November 2019, with only marginal 1% falls in June and July this year. With average sale prices of £534,265, which is £9k short of the record high set in September 2022, London needs house prices to come down to make them affordable for buyers getting a mortgage.

Source: House Price Index (HPI)

England & Wales

England and Wales echo London with a 46% fall year on year for May and the average house price for July was only £3k off the record high set in November 2022 of £306,696. If house prices are falling between August and now, then it isn't showing in the actual Land Registry data.

Source: House Price Index (HPI)

Are house prices actually falling?

The Halifax house price index shows that house prices are falling at their fastest rate since the financial crisis in 2007-8 and have hit their lowest level in real terms since 2016. They write further, stating annual prices in August dropped 4.6 per cent with higher interest rates weighing on the property market; prices have fallen for five consecutive months.

The reason for this fall could be linked to prospective buyers delaying purchasing, in the hope of greater stability and clarity on the direction of rates in the coming months of September to November.

I prefer the overall data provided by the Land Registry, and the latest data for June 2023 shows house prices in England and Wales are up 2% year on year and only down 1% in London. I expect to see August and September average prices fall faster, which I will report on in the October housing market report.

Source: House Price Index (HPI)

Mortgage approvals are falling

Bank of England data shows that mortgage lending for purchases has fallen YOY by 37% for August 2023, which is in line with the overall shrinking of the housing market. Purchasers are looking for better deals; falling house prices or lower mortgage rates.

At SAM Conveyancing we have clients telling us that they can only afford to buy on the mortgage rate they secured in April, they'd not be able to buy their property based on the current rates with the same lender. This is why it is so important that you never let your mortgage offer expire and lose your rate. If this is happening to you, read our article - What happens if my mortgage offer expires?

What about the remortgage market?

Half a million households are set to come off their fixed-rate mortgages in the run-up to Christmas and January, which should see an increase in the number of remortgages, however, some may look to wait until the new year before securing a mortgage in the hope of a more favourable interest rate. This is evidenced in the Bank of England data, as remortgages are down by 49% YOY and 57% MOM.

With the Bank of England choosing to keep the base rate at 5.25%, mortgage lenders are able to offer more mortgage products. The Financial Times reported that UK mortgage rates are set to fall further following the Bank of England (BoE) decision to hold the base rate at 5.25 per cent. We will see the impact of this in our October report next month.

Homeowners are also faced with a jump in mortgage arrears. The Bank of England reported that the value of mortgage balances in arrears increased 29% year on year, in the three months to the end of June. This will impact a homeowner's ability to remortgage as their credit report will be impacted.

Source: Bank of England

1.5 million homes in 10 years...really?

Labour are pledging to build new towns and suburbs to the tune of 1.5 million new homes in 10 years if they are voted into the next Government. Under the existing Conservative government, we see a close to record-breaking spike in new builds started in the second quarter of 73,620. The increase is primarily in Private Enterprise - 57,940 with affordable housing, following up with 13,930 for housing associations and 1,750 for local authorities.

The spike can't cover the gaping gap left from undersupply over the last 20 years, which has forced up house prices, however, it will help the current market get moving again.  

If Labour are planning to increase housing stock by 150,000 a year on top of current projects, then we could see building in excess of the 300,000 target the Government has always stated it needed to build to meet demand. If this happens, don't expect a sudden fall in house prices because most new build properties come with a top-end price tag.

Source: Gov.UK

Andrew Boast FMAAT MIC
CEO and Author | SAM Conveyancing

The news of price drops should excite buyers to enter the market, especially now that there are more affordable mortgage products, with some mortgage lenders offering rates under the current base rate (subject to terms and loan to value).

The reported results for new build starts in the 2nd quarter are very exciting and will go some way to kick-start the housing market, as supply can start meeting demand. However, we need a continual flow at these levels, so will you be persuaded by Labour's pledge to meet that demand for a long period of time?

I see a strong autumn ahead where there will be more sales volume than expected, as buyers seek a bargain, banks offer more affordable mortgage products and sellers adjust their expectations of what their property is currently worth in this market.

Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index, ONS and Property Mark (NAEA).

Andrew Boast of Sam Conveyancing
Written by:
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh Bailey, Digital Marketing Manager
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Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.

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