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UK average house price drops to £285,579 in biggest fall since 2008

The average UK house price in November was £285,579. Colourful houses in Notting Hill, west London. The stamp duty holiday announced in 2020 is expected to be extended until the end of June, as part of budget measures to be announced next week by chancellor Rishi Sunak. Picture date: Wednesday February 24, 2021. Photo credit should read: Matt Crossick/Empics
The average UK house price in November was £285,579. Photo:Matt Crossick/Empics

Homebuyers needed £285,579 to afford a property in the UK in November as the average house price fell by 2.3%.

The market continued to cool down from record high prices as the average price tag for a home in the UK fell for the third consecutive time, according to Halifax. It is also the biggest drop since October 2008.

The annual rate of house price growth slowed to 4.7%, from 8.2% in October.

“While a market slowdown was expected given the known economic headwinds – and following such extensive house price inflation over the last few years (+19% since March 2020) – this month’s fall reflects the worst of the market volatility over recent months,” Kim Kinnaird, director of Halifax Mortgages, said.

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Read more: House prices: Higher mortgages stalling property market

“Some potential home moves have been paused as homebuyers feel increased pressure on affordability and industry data continues to suggest that many buyers and sellers are taking stock while the market continues to stabilise,” she added.

The North East of England is at to the top of the table for annual house price inflation, up to 10.5%, with an average property costing £173,587.

Wales and the South West have seen the sharpest slowdown of annual growth. A property in Wales now has an average price tag of £220,689, as inflation came down from 11.5% to 7.9%. In the South West, prices dropped from 10.7% to 8.4% in a year, with a house in the region now costing on average £307,750.

Scotland saw another slowdown in the rate of annual house price inflation, to 6.5% from 7.4%. A Scottish home cost an average of £203,132 in November.

The rate of annual growth in Northern Ireland eased back to 9.1% with a typical home costing £185,097.

London continued to lag compared to other UK regions, with property prices up 5.2% over the last year. However, given the £549,160 average price tag of a London home, the is still the most expensive place to buy a house.

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“When thinking about the future for house prices, it is important to remember the context of the last few years, when we witnessed some of the biggest house price increases the market has ever seen. Property prices are up more than £12,000 compared to this time last year, and well above pre-pandemic levels (+£46,403 vs March 2020),” Kinnaird said.

“The market may now be going through a process of normalisation. While some important factors like the limited supply of properties for sale will remain, the trajectory of mortgage rates, the robustness of household finances in the face of the rising cost of living, and how the economy – and more specifically the labour market – performs will be key in determining house prices changes in 2023,” she added.

Tom Bill, head of UK residential research at Knight Frank, said the jump in mortgage rates after the mini-budget hit house prices.

“House prices in November moved sharply in the opposite direction to mortgage rates, which spiked following the mini-Budget.The slightly confusing message for buyers and sellers is that mortgage rates should continue to edge down even as the Bank of England raises the base rate," he said.

Bank of England data has shown that mortgage approvals fell 10% in October, as the jump in borrowing costs hit demand.

Victoria Scholar, head of investment at Interactive Investor, said the "chronic shortage" of UK houses for sale is providing some support to house prices.

"We are coming off the back of heightened property price inflation for many years, with those upward pressures finally starting to ease off as a result of rising mortgage rates, a looming recession and the cost-of-living crisis. However, limiting this to some extent is the chronic shortage of housing supply in the UK economy, that is stemming sharper declines.

"Many potential house buyers are waiting for mortgage rates to ease and house prices to soften further into next year before reigniting their property searches. The chaos around the mini-budget which sent mortgage rates soaring has also put off potential buyers, who are still hoping that mortgage rates could become more affordable from here."

Watch: Will UK house prices ever fall?