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Average UK house price falls to £293,835 as market cools

house price A row of traditional houses on a street in London's Muswell Hill suburb, located to the north of London, with views of the Canary Wharf on the horizon.
In London the average house price now stands at £553,849. Photo: Getty

House prices decreased slightly in September but homebuyers still needed an average of £293,835 to afford a property in the UK.

The 0.1% drop is the second marginal decrease of the past three months as the pace of annual growth also slowed down, returning to single digits for the first time since January, according to Halifax.

The annual rate of growth fell further to 9.9% in September, from 11.4% in August.

While stamp duty cuts, the short supply of homes for sale and a strong labour market all support house prices, the prospect of interest rates continuing to rise sharply amid the cost of living squeeze, plus the impact in recent weeks of higher mortgage borrowing costs on affordability, are likely to exert more significant downward pressure on house prices in the months ahead,” Kim Kinnaird, director of Halifax Mortgages, said.

Read more: UK mortgage interest rates surge past 6% to highest level for 14 years

“This will undoubtedly be a cause of some concern for homeowners, but the unprecedented rate of property price inflation we’ve seen in recent years has been far above the historic average. It’s important to look at slower growth in this context — since the start of the pandemic average property values have risen by around +23% (almost £55,000) with detached house prices up by more than £100,000 over the same period,” she added.

Wales remains at to the top of the table for annual house price inflation with a rate of 14.8%, down from 15.8% in the previous month, and an average property cost of £224,490.

The West Midlands has now overtaken the South West to record the strongest rate of annual growth in England, with house prices rising by 13.3% over the last year, down slightly from 13.5% in August. In cash terms prices have risen by £30,000 over that period, with an average property now costing £255,822.

The pace of annual house price growth in Northern Ireland eased back further last month to 10.9% from 12.5%, with a typical home now costing £184,570.

Scotland also saw a further slowdown in the rate of annual house price inflation, to 8.5% from 9.3%. A Scottish home now costs an average of £204,305, largely unchanged from the previous month.

London still has the slowest rate of annual growth amongst the UK nations and regions, with house prices rising by 8.1% over the last year. Though with a typical home costing £553,849 the capital’s average property price remains by far the most expensive in the country.

“As we can now see, buyers coming to the market are being much more sensible with their cash and budget decisions and are analysing the market and taking their time in moving so we will continue to see this being reflected in the prices being achieved,” Nathan Emerson, chief executive of Propertymark, the UK professional body for estate agents, said.

Read more: Why have interest rates gone up and how will it affect your mortgage?

"Our member agents have told us that they are seeing mortgage in principle offers expire before the completion of a property. Due to interest rate rises, this is then causing some buyers monthly payments to increase and is showing signs of re-negotiations.

"With prices inflating over 20% in the last two years, witnessing a decrease isn't as majorly concerning as it sounds," he added.

Alice Haine, personal finance analyst at Bestinvest, warned of the challenges homeowners face as the pace of mortgage rate rises has accelerated since the mini-budget.

“With five-year fixes also now topping 6%, homeowners looking to remortgage face monthly payments hundreds of pounds higher when they lock in a new deal," she said.

Watch: Will UK house prices ever fall?