Residential Property Investment holds its own despite downturn

The average sale price of completed home transactions using cash or mortgages in England and Wales in October 2023 fell by some £15,700, or 4.1 per cent and now stands at £362,777.

That’s the data from e.surv which produces a monthly housing market snapshot.

However, despite the fall, e.surv predicts the continued lack of supply will continue to support prices from any seismic fall. 

There are also significant regional differences within the headline data. The North East reports the smallest fall in prices over the last twelve months, at 1.5 per cent relegating Yorkshire and the Humber to second place.

e.surv also believes that the housing market is supported by a robust labour market and improving affordability. 

Furthermore, this week’s Autumn Statement could support sales volumes and pricing in the coming months if the government introduces supportive measures for both ends of the market, such as stamp duty relief for downsizers and assistance for first-time homebuyers.

The 4.1 per cent annual fall is the biggest since August 2009, when the housing market was recovering from the aftermath of the banking crisis of 2007/2010. 

And it follows almost 14 months of consecutive drops in value, from a peak growth rate of 12.7 per cent in August 2022. The market was at that time experiencing buoyant demand following the Covid pandemic, and supported by historically low interest rates.

House prices have fallen by some £1,600, or 0.4 per cent in the month of October 2023. Prices have now dropped to levels last seen in February 2022.

However in terms of actual (nominal) prices, the fall in price of £15,700 since its peak in October 2022 must be viewed against the cumulative £47,600, or 15 per cent rise in prices since the start of the pandemic in March 2020. 

At the same time, over this same period, the CPIH Inflation Index has risen by some 20 per cent - so in real terms, taking account of inflation, the average price of a home has fallen by some five per cent since March 2020. 

Again significant, but e.surv says it is doubtful if any other asset classes have achieved a return equal to or greater than this over the same period.

Table - Average House Prices in England and Wales for the period October 2022–October 2023