UK Property Values See Steepest Annual Fall Since 2023

This decision triggered a downturn.

Andrew Asaam noted a challenging economic backdrop currently tests housing demand. He stated, "Renewed inflationary pressures, driven in part by the conflict in the Middle East, are keeping borrowing costs high and adding to the squeeze on household finances, making some buyers understandably more cautious."

Despite the rate increase, around nine in 10, or 87%, of outstanding homeowner mortgages are fixed rates.

For homeowners on tracker deals, the increase in the Bank of England base rate translates to an average rise of £30.72, based on typical outstanding mortgage balances. UK Finance provided this figure.

Looking ahead, some 2.3 million fixed-rate deals expire in 2027. This could expose a massive number of homeowners to new, higher interest rates.

Andrew Asaam also offered context for the current market conditions. He stated, "However, it’s important to put October’s fall in context. House prices have changed relatively little over the past couple of years, as the market has gradually adjusted to higher interest rates. The recent rise in energy and other household costs has added to the pressure on buyers, so some adjustment in prices is not surprising."

While conditions are expected to remain subdued in the near term, Andrew Asaam does not anticipate a sustained period of falling house prices. He believes that with wages continuing to rise faster than property prices, the gap between earnings and house prices should gradually narrow, helping affordability to improve over time.

Savills claims Britain’s sluggish housing market is not expected to recover until 2028.