Feeling a bit lost with so many house price indices out there?
The HomeOwners Alliance House Price Watch looks at all the information from the many indices out there to give you one easy-to-digest round-up of everything you need to know.
So, let's look at how prices have changed over the past month and year.
What’s going on with house prices?
When you average out the figures reported by the major indices, house prices fell 1.5% over the last year (see below graph) according to Homeowners Alliance.
That represents the third consecutive month where house price falls have increased, suggesting a market where buying conditions continue to worsen.
Based on the latest stats, the average UK home is now worth £287,546.
We have seen a staggering rise in UK house prices since COVID struck.
A combination of incredibly cheap mortgages and cash-flush buyers led to sharp growth each year since 2020.
However, the outlook has changed dramatically in the last year, with the cost of living crisis biting hard after the era of cheap loans came to a crashing halt.
The results of this squeeze are now starting to filter through to home sale prices, as you can see from the graph below.
After years of double-digit increases, house price growth started nosediving late last Summer and prices are now falling for the first time in a decade.
What will happen to prices over the next year?
Halifax said expects to see house prices keep falling into next year.
"[Borrowing costs] will likely remain much higher than homeowners have become used to over the last decade," it said in its latest analysis.
"The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year.”
What's happening to house prices near me?
Land Registry has the most comprehensive data regarding housing stock, and it provides a handy regional breakdown of house prices across the UK.
Its data takes slightly longer to compile so isn't quite as up-to-date as that of the other property indices.
Nonetheless, it provides an interesting insight into how areas are faring relative to each other.
Looking at the last 12 months, its figures showed that all areas were still reporting positive growth, with the North East proving the most buoyant at 4.7% followed by the North West at 3.5%.
However, the monthly change figures look slightly less rosey.
Two of the regions reported negative growth in June (the latest Land Registry figures available), and we can expect to see more dramatic falls in the months ahead given what we've seen from the other, more up-to-date, indices.
What the indices say
“House prices and transactions remained fairly stable over the past month. However, buyer demand continues to fall and more sellers are accepting below asking price offers to achieve a sale.
“Larger, more expensive properties are seeing the greatest fall in sales activity and prices.
“Looking ahead, activity is expected to remain constrained and house prices are likely to continue to fall whilst mortgage rates remain elevated.”
“The interest-rate brakes being applied more strongly to slow the economy are now beginning to bite in the housing market.
“While prices and sales bounced back this year much more strongly than most expected, the unexpectedly stubborn inflation figures and the surprise of further mortgage rate rises when many felt that they had stabilised, have contributed to the fall in prices and number of sales agreed.
“However, buyer demand remains resilient at 3% above 2019’s more normal market levels, buoyed by a shortage of quality property for sale and ongoing housing needs.
“First-time buyers, trader-uppers and downsizers with higher deposits and lower mortgage requirements appear to be still keenly searching the market, not wanting to miss out on the right property that is not over-priced and that they can still afford.”
“There was a slight fall of 0.2% over the month. As a result, the price of a typical home is now 4.5% below the August 2022 peak.
“Investors’ views about the likely path of UK interest rates have been volatile in recent months, with the projected Bank Rate peak fluctuating between 5% in mid-May and 6.5% in early July.
“There has been a slight tempering of expectations in recent weeks but longer-term interest rates, which underpin mortgage pricing, remain elevated.
“As a result, housing affordability remains stretched for those looking to buy a home with a mortgage.
“A prospective buyer, earning the average wage and looking to buy the typical first-time buyer property with a 20% deposit, would see monthly mortgage payments account for 43% of their take home pay (assuming a 6% mortgage rate).
“This is up from 32% a year ago and well above the long-run average of 29%.
“This challenging affordability picture helps to explain why housing market activity has been subdued in recent months.”
“Average UK house prices edged down slightly in July. While this was the fourth consecutive monthly decrease, prices are little changed over the last six months.
“The housing market continues to display a degree of resilience in the face of tough economic headwinds. In particular, activity amongst first-time buyers is holding up relatively well, with indications some are now searching for smaller homes, to offset higher borrowing costs.
“Conversely the buy-to-let sector appears to be under some pressure, though elevated interest rates are just one factor impacting landlords’ business models, together with considerations of future rental market reforms.
“Expectations of further Base Rate increases from the Bank of England were tempered by a better-than-expected inflation report for June.
“However, while there have been recent signs of borrowing costs stabilising or even falling, they will likely remain much higher than homeowners have become used to over the last decade.
“The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year.”
“Higher mortgage rates have hit home buyer demand, but the impact is not uniform across the country.
“Southern England is set to experience above-average price falls.
“Drilling below the regional level, it's clear that housing markets with average prices over £300,000 are feeling the impact of higher mortgage rates – 80% of markets with an average price over £300K are registering annual price falls.
“There is an above average proportion of sellers cutting asking prices with 6.5% of homes for sale seeing >5% cuts to asking prices; a clear sign that buyers have become more price sensitive over the last 2 months.
“There is a shift in the mix of homes selling towards smaller homes.
“Comparing trends in the last 4 weeks to the same period over the last 5 years we find that agreed sales of family homes are down by up to 41%.
“Sales of smaller homes and flats have fallen to a lesser degree.”
“The July 2023 RICS UK Residential Survey results are symptomatic of a market losing further ground in the face of higher mortgage rates.
“Indeed, indicators tracking activity continue to exhibit firmly negative readings, while widespread falls in house prices are being reported.
“Moreover, respondents foresee this picture remaining in place over the near-term, with sales expectations turning a little more pessimistic during the latest survey period.”