House prices experience second consecutive rise in prices, according to Halifax's HPI (2024)

House prices in November saw a 0.5% increase in prices, according to Halifax's latest House Price Index (HPI).

The increase represents the second consecutive monthly increase in prices with October seeing a 1.2% increase in prices with the average home now standing at £283,615.

The shortage of homes and increased rate of mortgage approvals have been used to explain the rise, however, the future of the housing sector remains uncertain with inflation and affordability still posing a significant challenge to homebuyers.

'How much is my house worth' may be crossing your mind at the moment — here's what you need to know about house prices in the UK.

House prices see second monthly increase for the first time in 2023%

House prices have seen a second consecutive monthly increase with prices rising slightly by 0.5% in November.

Prices are still down 1% compared to November 2022 (£286,328) but this figure was 3.1% in October showing glimpses of a recovering housing market.

Kim Kinnaird, Director, Halifax Mortgages, said: “Over the last year, despite the wider economic headwinds, property prices have held up better than expected, falling by a relatively modest -1.0% on an annual basis, and still some £40,000 above pre-pandemic levels.

“The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand.

"That said, recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely as a result of an improving picture on affordability for homebuyers. With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases."

Asking prices well below winter average

The reported rise in house prices contrasts with Rightmove's HPI data for October, which showed that average asking prices have experienced their lowest increase in October since 2008.

They showed that prices rose by 0.5%, but this is considerably below the 20-year average of 1.4% at this time of year with the final quarter of house prices regularly seeing the largest increase in prices.

Tim Bannister Rightmove's, Director of Property Science, stated: "New seller asking prices have seen a rise, as they usually do at this time of year following the summer holiday season.

"While this year's much more subdued rise indicates that some new sellers are gradually heeding their agents' advice to price competitively, agents report that other sellers still need to adjust their expectations on the price that they are likely to achieve in the current post-pandemic, lower-activity market, where six in ten homes are now selling rather than eight in ten."

Annual declines blamed on interest rate rises

Although a reprieve for house prices in the short term, the yearly decline in house prices should be of concern to those looking at buying or selling a house.

This has been blamed on rising interest rates and comparatively buoyant markets a year ago have been blamed by industry experts for the continuing poor performance in house prices.

Kim Kinnaird said: “Prospective sellers appear to be taking a cautious attitude, leading to a low supply of homes for sale. This is likely to have strengthened prices in the short-term, rather than prices being driven by buyer demand, which remains weak overall. While many people will have seen their income grow through wage rises, higher interest rates and wider affordability pressures continue to be challenges for buyers.

“Across the medium-term, with financial markets not anticipating a decline in the Bank of England’s Base Rate soon, we expect house prices to fall further overall – with a return to growth from 2025."

However, Robert Gardner, Nationwide's Chief Economist, disagreed with this view, claiming: “There has been a significant change in market expectations for the future path of Bank Rate in recent months which, if sustained, could provide much needed support for housing market activity.

“Nevertheless, a rapid rebound still appears unlikely. Cost-of-living pressures are easing, with the rate of inflation now running below the rate of average wage growth, but consumer confidence remains weak, and surveyors continue to report subdued levels of new buyer enquiries."

Will house prices rise or continue to fall in 2023?

There are some positive signs as the market begins to pick up. The number of new properties entering the market increased by 12% in the first week of September compared to the average weekly number in August.

Robert Gardner suggested: “While mortgage rates are unlikely to return to the lows prevailing in the aftermath of the pandemic, modestly lower borrowing costs, together with solid rates of income growth and weak/negative house price growth, should help underpin a modest rise in activity in the quarters ahead.

“Moreover, while markets are projecting that the next Bank Rate move will be down, there are still upward risks to interest rates. Inflation is declining, but measures of domestic price pressures remain far too high."

Kim Kinnaird stated: "The economic conditions remain uncertain, making it hard to assess the extent to which market activity will be maintained. Other pressures – like inflation, the broader cost of living, overall employment rates and affordability – mean we expect to see downward pressure on house prices into next year.”

What does this mean for mortgages?

The current state of the mortgage market has created an atmosphere of uncertainty among potential homebuyers, with more changes expected in the coming week.

Mortgage rate rises have continued despite the Bank of England's (BoE) decision to keep the Base Rate at 5.25% for the third consecutive month.

However, as inflation rates are beginning to lower the BoE announced in September that the Base Rate would not rise, the first time in 14 this had not risen, providing relief to those looking to secure a mortgage.

There is also some improvement in buyer affordability as mortgage rates continue to fall. The average five-year fixed mortgage rate is now 5.67%, down from its peak of 6.11% in July.

Tim Bannister claims: "Mortgage rates continue to trend in the right direction and have now dropped for 11 consecutive weeks, with buyer affordability gradually improving compared to this time a year ago.

"Those with a larger deposit have seen the biggest benefit from recent rate drops, with rates for those with a smaller deposit, typically those further down the housing ladder, not dropping as quickly.

"The mortgage market is much more stable right now compared to three months ago, giving movers a little more assurance over the rate they are likely to be offered and therefore what they are likely to be able to afford. Those looking to secure a new home for the new year should apply for a Mortgage in Principle to work out what they could afford, and listen to local estate agents about what's happening in their local housing market."

What does this mean for those wanting to sell?

Despite this relatively restrained rise in asking prices, buyer activity remains notably lower than the frenzied post-pandemic market, according to Rightmove.

Compared to the same time last year, the number of agreed sales has declined by 17%, and the proportion of homes securing a buyer and being marked "Sold Subject To Contract" has dropped from eight in ten during the peak of the frenzy to six in ten presently.

Buyers are active, particularly when the right property at the right price becomes available, but agents advise sellers to capture buyer attention by setting a competitive price from the outset.

According to Rightmove's analysis, commencing with a higher price and later reducing it significantly diminishes the chances of a successful sale. However, many sellers are struggling to adapt their pricing strategies in this more challenging market.

Tim Bannister said: "In a market that agents describe as the most price-sensitive ever, buyers are likely to be on the look-out for homes that they feel represent excellent value, and to attract one of these motivated buyers, sellers need to price right first time.

"If similar nearby properties for sale appear overpriced, serious sellers have an opportunity to stand out from the crowd with a more competitive price and attract immediate buyer interest that our research shows significantly increases the likelihood of finding a buyer."

I’m buying/selling a house, what do I need to know?

The recent slowdown in consumer price inflation was not as significant as anticipated, leading to increased expectations for future Bank Rate increases, according to Nationwide.

Kim Kinnaird supports this view, claiming that the high consumer price inflation has caused market expectations of multiple rate increases, as the Base Rate rose to 5.25%. As a result, fixed mortgage rate increases become common throughout the market.

She stated: “Market activity levels slowed during August, and while there is always a seasonality effect at this time of year, it also isn’t surprising given the pace of mortgage rate increases over June and July. While these did ease last month, rates remain much higher compared to recent years.

However, she also claimed: "The market will continue to rebalance until it finds an equilibrium where buyers are comfortable with mortgage costs in a higher range than seen over the previous 15 years."

For buyers, the stamp duty cut announced within the mini-budget in September 2022 means that the threshold for stamp duty exemption in England and Northern Ireland has been lifted from £125,000 to £250,000.

For first-time buyers, who previously paid no stamp duty on the first £300,000, that figure has gone to £425,000.

Those planning on buying a house can take a look at our house viewing checklist as well as look at our guide on building surveys.