In November, house prices saw a modest growth of 0.2%, contributing to a national annual decline of -2.0%, as reported by Nationwide. This marks the third consecutive month of price increases, signalling increased stability in the market, partly due to lower mortgage rates. Lenders, in efforts to attract business amidst limited mortgage approvals, have reduced their margins, thereby stimulating demand from buyers who had previously held back during peak mortgage rate periods.
The economic environment has also played a role, with inflation dropping more than anticipated in October to a two-year low of 4.6%, according to the ONS, and growing confidence among economists that the base rate has reached its peak. However, challenges persist, with low activity and price declines expected in the short term. Surveyors continue to report declining supply and demand, indicating ongoing house price falls. This sentiment is echoed in the RICS survey, with opinions on prices being more pessimistic than they have been since 2009.
Although the supply of homes for sale has returned to pre-pandemic levels, mortgage approvals remain low, resulting in increased discounts from asking prices. Zoopla reports a 34% increase in the number of homes for sale in November compared to the previous year, while mortgage approvals are still 27% below pre-pandemic levels, according to the Bank of England. Consequently, discounts from asking prices have risen from an average of 3.4% in the first half of 2023 to 5.5% in November, according to Zoopla.
Local variations in price declines are evident in Land Registry data, with over 100 local authorities experiencing falls, predominantly in London, the South East, and East of England. However, certain local markets, such as Rosendale, Blaenau Gwent, and Nottingham, continue to see annual price growth. In terms of rentals, annual growth fell to 9.7% in October after 19 months of growth over 10%, according to Zoopla, marking the first time figures have dipped into single digits since January 2022. Despite this decline, rental growth remains robust and continues to accelerate in many regions.
