Drop in house price growth as brokers say enquiries ‘dried up’

The latest data released by the Office for National Statistics showed average house prices across the UK increased by 10.3 per cent in the year to November 2022, down from 12.4 per cent the month before.

The data also showed that the average value of a UK house sat at £295,000 in November 2022, £28,000 more than the previous year but down slightly from the previous month’s record high of £296,000.

Today’s figures come as mortgage brokers report a slowdown in new mortgage enquiries following the Christmas period, with some saying remortgage work is what is keeping them occupied.

This does not change the fact there will still be a percentage of people who will be forced to sell their houses from spring onwards when these higher rates start to kick in Jamie Lennox, Dimora Mortgages

Adviser at Mather & Murray Financial, Samuel Mather-Holgate said this could indicate that housing purchases have stalled.

"This is not unsurprising as people are worried about their jobs and the economy in general. Inflation is hurting and rising interest rates make it less affordable to own a home.

"When the Bank of England pivots in a few months we might see some confidence return to the market,” Mather-Holgate said.

The latest inflation figures, released today, showed that inflation dropped slightly in December to 10.5 per cent as the price of fuel and clothing fell.

So far this month, the average two-year fixed rate was 5.79 per cent, according to MoneyFacts, compared to 2.38 per cent this time last year.

Some in the mortgage industry have said the realisation that rates are not going to return to 1 per cent anytime soon is starting to sink in with buyers.

“People are now deciding to just commit to the idea and take the cards they are dealt with mortgage rates,” Jamie Lennox, Dimora Mortgages director said.

“There is a sense that the potential damage to the housing market may be limited with mortgage rates reducing. 

“However, this does not change the fact there will still be a percentage of people who will be forced to sell their houses from spring onwards when these higher rates start to kick in and I don't think we will start to see the true extent of the house price reduction until towards the end of the year,” he added.

Meanwhile, today’s figures from the ONS showed that Northern Ireland remained the cheapest country in the UK to purchase a property, with the average house price increasing by 107 per cent over the year to £176,000.

England remained the most expensive, with a 10.9 per cent annual increase to £315,000. 

In Scotland, house prices increased by 5.5 per cent over the year to £191k. While in Wales, the average house price stood at £220,000 in November, with an annual increase of 10.7 per cent.

jane.matthews@ft.com