The UK Housing Market in Late 2023: What It Means for Selling a House

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The UK housing market has seen its fair share of ups and downs in recent times. As per the latest report from Halifax, the average house price in the UK rose by 1.1% to £281,974 in October, breaking a six-month streak of falling prices. This news comes as a glimmer of hope for homeowners and potential sellers, but what does it really mean for those looking to sell their homes? Let’s delve into the details.

Cautious Sellers and a Shortage of Homes:

The recent price increase can be attributed to prospective sellers adopting a cautious attitude, resulting in a shortage of homes available for sale. It’s crucial to understand that this surge is likely a short-term trend rather than a result of increased buyer demand, which remains weak. Kim Kinnaird, the director of Halifax Mortgages, pointed out that while some individuals have seen their incomes grow due to wage increases, challenges like higher interest rates and affordability pressures continue to affect buyers.

A Modest Price Recovery:

Compared to the same time last year, house prices in the UK fell by 3.2% in October, which is a smaller decline than the 4.5% drop observed in September. While this indicates a more favourable situation, it’s essential to keep in mind that the overall market remains subdued, with transactions being far from booming. The housing market may not see significant improvements until January or February of the coming year, according to experts.

Regional Variances:

The UK housing market is diverse, and regional variations continue to play a significant role. South-east England has witnessed the most substantial annual decline in house prices, with a 6% drop. On the other hand, London still boasts the highest average house price in the UK at £524,057, although it fell by 4.6% over the past year. In Scotland, house prices experienced a minor 0.2% annual decrease, with an average price of £202,608.

Bank of England and Interest Rates:

The Bank of England recently left interest rates unchanged at 5.25%, the highest level since the 2008 financial crisis. This decision was accompanied by a warning that the economy could be on the brink of a recession in the coming year. The bank’s intention to keep interest rates high for an extended period as it tries to combat inflationary pressures has implications for the housing market. However, the end of rate rises has resulted in a slight dip in mortgage costs, potentially making homeownership more accessible for some.

Long-term Outlook:

Halifax predicts that house prices will continue to fall in the short term but expects a return to growth from 2025. This projection should be viewed within the context of the longer-term trend, where prices are still approximately £40,000 higher on average than pre-pandemic levels.

The First-Time Buyer Market:

The first-time buyer market has held up relatively well, with prices down 2.4% year on year, a smaller decrease compared to the overall market’s 3.2% fall over the past year. As sharp rent increases drive more people towards homeownership, this segment of the market remains resilient.

Housebuilders’ Response:

To adapt to slowing demand, housebuilders have reduced the number of homes they are building, which has helped maintain prices. For instance, Persimmon reported a 37% decrease in the number of homes built between July and November. Although their sales rate improved in the past five weeks, they anticipate highly uncertain market conditions into 2024.

While the recent uptick in UK house prices is a positive sign for sellers, it’s essential to understand that the market remains complex and subject to various regional and economic factors. Selling a house involves more than just timing; it requires careful consideration of individual circumstances, local conditions, and long-term trends. With the housing market likely to remain uncertain in the near future, homeowners and potential sellers should approach the situation with a degree of caution and consider professional advice before making any decisions.

For more advice, contact our team at Home EA today.


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