New data from the Office for National Statistics (ONS) paints a picture of a UK property market losing steam, with annual house price growth slowing to a near standstill.
The figures for September 2023 reveal a meagre 0.2% increase in average house prices compared to the previous year, a significant cooling from the heady growth witnessed in recent times.
A Tale of Two Nations: Regional Divergence Widens
The story is not uniform across the country. England's property market is at the epicentre of the slowdown, with prices creeping up by just 0.1% over the year to September. This is in stark contrast to other UK nations.
Wales saw a more resilient market, with prices rising by 2.7%. Scotland experienced a healthy increase of 2.5%, while Northern Ireland led the pack with a robust 4.1% annual rise.
London's Property Woes Deepen
London continues to be the biggest drag on the national figures. The capital's property market is in a clear downturn, with prices falling by 1.1% over the year. This makes it the worst-performing region in the entire UK, highlighting a dramatic reversal of fortune for what was once the nation's engine of property price growth.
Estate Agents Feel the Pinch
The cooling market is having a direct impact on estate agencies. Foxtons, a prominent London-based estate agent, reported a sharp 16% drop in property sales revenue during the third quarter. This serves as a real-world barometer for the challenges facing the sector as transaction volumes decline.
Why is the Market Slowing Down?
Analysts point to a potent cocktail of economic pressures that are squeezing the property market:
- Soaring Mortgage Rates: The Bank of England's successive interest rate hikes have dramatically increased the cost of borrowing, pricing many potential buyers out of the market and forcing others to reconsider their budgets.
- The Cost of Living Squeeze: High inflation impacting energy, food, and other essentials has left households with less disposable income to save for a deposit or afford higher monthly mortgage repayments.
- Economic Uncertainty: Broader economic concerns are causing both buyers and sellers to adopt a 'wait and see' approach, leading to a drop in market activity.
The ONS data, which is based on completed property transactions, often provides a more comprehensive and stable view than other leading indices from lenders like Halifax and Nationwide, which are based on their own mortgage approval data.
