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South West house prices slump by £7,000 in just two months

homes in st ives cornwall - John Lawrence
homes in st ives cornwall - John Lawrence

House prices in the South West have dropped by more than £7,000 in just two months as the number of second home buyers dries up after the pandemic.

The average home in the South West sold for £329,691 in January, according to the Office for National Statistics. This was a drop of 2.1pc, or £7,186, from the November peak.

Paul Le Bas, of Millerson estate agents in Cornwall, said: “In our little patch in West Cornwall, prices have come down between 5pc and 7pc.

“If we’re putting a house on for £400,000, nine times out of 10 if an offer goes in at £390,000 the sale will be agreed.

“Post-Covid, the market was absolutely booming and the prices being achieved were just astronomical. Then we had the dear old Liz Truss mini-Budget and the market stopped overnight.”

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The South West has a higher proportion of cash buyers than other regions, which means in theory it was more insulated from the surge in mortgage rates after the mini-Budget. However, the market turmoil hit buyer confidence just as the South West market also had to grapple with a sea change in demands for holiday homes.

Demand for holiday homes has cooled as the lifting of travel restrictions means holidaymakers are now travelling overseas again and interest from investors has cooled.

Mr Le Bas said: “A lot of the holiday let homeowners have had to reduce their prices a little bit.”

Some of the people who relocated because they could work remotely have been called back to their offices and have sold up, Mr Le Bas said. He added that one buyer who purchased a detached house in Carbis Bay was forced to sell after six months of purchasing following a return to the office.

Andrew Chilcott, of Cornwall estate agent Lillicrap Chilcott, said: “There are probably 30pc fewer able buyers in the market today in comparison with this time last year.” A drop-off in second home buyers is key, as the market becomes more driven by owner occupiers, he added.

The falls in the South West have outpaced the 1.65pc drop in UK house prices over the same period. Nationally, the average home sold for £289,818 in January – £4,875 less than two months earlier.

On a monthly basis, house prices fell in every single region of Britain except the West Midlands and the North East, the ONS data showed.

National year-on-year house price growth slowed to 6.3pc, down from 9.2pc in December.

In London, where house prices started falling much earlier, values were down £10,414 from their August peak – a drop of 1.9pc.

Scotland recorded the biggest percentage fall, with values down 3.8pc since October – a loss of £7,346.