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Average property prices in UK fall 0.2% in July

UK house prices continue to fall by another 0.2% and economists predict they could drop up to 12% by the end of 2024

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 25 July 2023

3 min read

Average property prices in UK fall 0.2% in July

Decrease in property prices (monthly)0.2% since June 2023
Decrease in property prices (annual)2.6% since 2022
Expected decrease in property prices12% by end of 2024 (predicted)
Average UK property price£285,932 (according to Halifax HPI)

We’ve written about the UK property market many times in recent months, with changes to interest rates, inflation and more having a big impact this year.

This month the UK property market has taken another hit, as average house prices fell by 0.2% in July. This could be seen as positive news for buyers, first time buyers in particular.

However, these lower prices will have a huge effect on the market for the next couple of years. Prices are predicted to fall by as much as 12% by the end of 2024.

A key factor driving these lower prices is the consistently increasing mortgage rates from UK lenders. With so much instability and uncertainty in the mortgage market, it makes sense that buyers are more wary and ultimately sellers are losing out.

More about mortgages:

The mortgage market in the UK has been struggling over the last year. Factors such as persistently high inflation have led to soaring interest rates. Recently the Bank of England voted for a 13th consecutive interest rate rise, leaving the UK with a base interest rate of 5%.

The impact of this on mortgages has been immediately noticeable, with many people put off buying while rates remain so high. Due to this, sellers have had to resort to dropping prices to make a sale.

Rightmove House Price Index – July 2023

Rightmove’s most recent house price index release has provided insight into what is happening in the UK housing market:

  • House prices are down £905 on average this month (0.2%), which is marginally lower than the expected rate of 0% for this time of year
  • Number of property sales agreed are around 12% lower (compared to 2019 figures)
  • Number of properties available for sale are also 12% lower (compared to 2019 figures)
  • Sellers that are over pricing (anticipating the need for reduction) are 10% less likely to find a buyer
  • The average mortgage interest rate is up 0.49% (based on Rightmove’s mortgage tracker looking at a 5 year fixed rate mortgage with 85% loan to value)

Will UK house prices continue to fall?

The market has been massively impacted by stubbornly high inflation and continuing mortgage rate increases.

Tim Bannister, Rightmove’s Director of Property Science has given a statement that:

 “The continuing twists and turns of persistent inflation and higher mortgage rates have posed some additional challenges for the market. Agents report that some movers are pausing until there is more certainty that mortgage rates have stabilised, as well as reviewing how higher costs affect their plans.”

Economists are predicting house prices will have fallen by around 6.6% by the end of 2023. This will then be followed by a further drop of around 4.9% next year.

Provided inflation has fallen to a manageable level, the market should begin to stabilise after this, but growth will likely be slow. This leaves the UK very much a buyer’s market rather than a seller’s market for the foreseeable future.

Related articles

Stay up to date with the latest news for the UK housing market on our MPO News page.

Resources

Nationwide – House Price Index

Gov.uk – House Price Index: reports

Office for National Statistics – UK House Price Index: May 2023

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