UK house prices see steepest annual decline since 2011

The annual rate of decline in UK houses prices dropped in October to its steepest level in 12 years, according to figures out on Wednesday by the Office for National Statistics.

Average house prices in the UK were £288,000 in October, some £3,000 lower than October 2022, the ONS said in a statement. The 1.2% year-on-year fall was worse than the revised 0.6% drop in September, and the lowest rate of decline since October 2011.

Average prices in England fell 1.4% from last October to £306,000, dropped 3% in Wales to £214,000, but increased in Scotland by 0.2% to £191,000.

House price annual inflation has generally been slowing since July 2022 when prices were up 13.8% year-on-year, and turned negative for the first time in over a decade in September.

Commenting on the data, economist Gabriella Dickens from Pantheon Macroeconomics said that the "leg-down" in official house prices in October "likely won't be the last" with Nationwide statistics pointing to further drops in November.

Dickens notes that the official ONS data is "based on completed sales, financed with mortgages that were arranged a few months beforehand", and reckons that prices have further to fall, despite already being 1.4% below their seasonally adjusted peak in November 2022.

"Note too that first estimates of the official index have ultimately been revised down by 1% on average since January 2020, as further transactions data are received from the Land Registry. And large revisions are even more likely than usual now, as the proportion of transactions informing the first estimate dropped to just 19% in October, about half the normal level. All told, then, we still expect a 5% peak-to-trough fall, with the nadir coming in Q1 2024," Dickens said.