London house prices crater as UK reports biggest drop since 2011– but experts are doubtful of data
London house prices cratered six per cent in the 12 months to November, as UK data shows the biggest fall for property in more than a decade.
The capital saw the biggest drop in the UK, but still had the most expensive homes at £505,000, almost double the UK average of £285,000. This is £6,000 down on the average from 2022.
The Office for National Statistics‘ figures, based on the latest UK House Price Index data published by HM Land Registry (HMLR), showed the largest annual fall since 2011.
Experts, however, threw doubt on the revised figures, with one major estate agent saying their data should be taken with “a pinch of salt”, branding them “out of date and irrelevant”.
This comes as the Bank of England raised interest rates 14 consecutive times in a bid to fight rampant inflation, which put pressure on borrowers and deterred Brits from taking out mortgages. Andrew Bailey has now held rates at 5.25 per cent three times, with experts largely predicting that they will start to come down again in the first half of the year.
On Monday, the market was given a shot in the arm after Rightmove reported house prices made their biggest month-on-month leap from December to January since the pandemic, rising by 1.3 per cent to £359k.
In early January, Halifax’s widely-read House Price Index (HPI) showed the price of a property in the UK had gone up 1.7 per cent on an annual basis, and the average home was now £4,800 higher than it was in December 2022.
The latest data from the ONS is based on figures compiled six months ago, according to one expert.
Today’s figures show average UK house prices decreased by 2.1 per cent in the last 12 months, down from a decrease of 1.3 per cent in a revised estimate, for the year to October 2023.
House price inflation has been slowing since the summer of 2022 when it sat at 13.8 per cent.
While the capital had the biggest fall in house prices, and still has the most expensive properties in the country on average, the data suggests it also had the lowest annual inflation rate since 2009, in wake of the financial crisis.
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 experts questioned the validity of the data, however, with Simon Gerrard, managing director of Martyn Gerrard, leading the charge. He said: “It’s very difficult to take statistics from the ONS with any less than a pinch of salt because the figures are out-of-date and irrelevant for all intents and purposes since they rely on land registry data, which is six months behind.
“On the ground, it’s clear the market has turned a corner. We’ve seen a 20 per cent increase in people registering to buy a home compared to this time last year.”
Nicky Stevenson, managing director at national estate agent group Fine & Country, commented that “realistic pricing from sellers who were more willing to negotiate with buyers softened house prices in November, but the time lag in the ONS’ reporting means that it feels like much has already changed.
“Many forecasters have made positive predictions for house prices in 2024, underlining the property market’s resilience, and there are many reasons for cautious optimism.
Iain McKenzie, chief of the Guild of Property Professionals, called the two per cent drop “modest considering the scale of the challenges that have faced the economy.”
“Forecasts at the start of last year suggested prices would fall off a cliff, following significant increases during the pandemic years.
“Today’s figures show that UK house prices have decreased by £6,000 which – although will be unwelcome news to sellers – could have been much worse.
Nick Leeming, Chairman of Jackson-Stops, added the data suggests “a frosty end to the year with buyers putting their searches on hold in order to see how mortgage rates would react as inflation fell once again.
“2023 was defined by mortgage affordability pressures and a shift from immense competition, towards a smaller, more committed buyer pool.
“While higher mortgage rates will continue to weigh on the majority of buyers minds, falling inflation will sow the seeds for a busier start to the market in 2024.”
He added that “the frenzied market that emerged post-pandemic is not the case anymore. Even as buyers adjust to higher mortgage rates the need to get better value from the property itself is likely to play a part in final agreed prices.”
Before an election later in the year, he also said property rows focusing on “supply shortages, market liquidity, and the increasing age of first-time buyers”, will move up the pecking order of discussion.