House Prices Stabilise: What’s the Forecast?

In the month of September, house prices showed no significant movement but marked a 5.3% decline (£14,500) compared to the previous year. The average house price now sits at £257,808. Interestingly, this quarter saw a dip in prices across all regions, with the south west experiencing the most pronounced decrease of 6.3%.

Sarah Coles, head of personal finance at Hargreaves Lansdown, commented: “The property market paused for breath in September. The question will be whether it’s going to plummet, bounce back, or plateau, and on balance, there’s a good chance it’s going to hold tight.

We have had some positive news in the past week or so. The Bank of England paused rate rises, and we’ve seen the major lenders cut their mortgage rates slightly. However, this isn’t enough to see demand rebound significantly. We’re not expecting massive cuts in the coming weeks. The Bank warned that rates were likely to at least hold at this level for some time, and may have to rise again if inflation gets beyond its control. We’re still seeing average rates way higher than they were in the spring, so it’s still going to be a drag on demand.

Meanwhile, relatively strong employment and sky-high rents may well keep a floor under house price falls. So rather than crashing or bouncing back, prices could plateau for a while. In markets like this, we can see a gradual drift south, but right now we’re not expecting anything dramatic.

Some stability could be more positive news for renters who had given up on the dream of owning a home of their own. When prices are rising faster than you can build a deposit, it feels hopeless. So now that prices are holding steady there’s the chance for more optimism. Of course, it’s still a huge stretch for renters, so it’s worth getting all the help you can – and it’s worth considering a Lifetime ISA so the government helps boost your deposit too.”