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House price growth at lowest level since 2020

House price growth over the last 3 months has dropped to 0.7%, the lowest level since February 2020 - but there are no price falls just yet. Here’s a closer look at what’s happening with UK house prices.

Words by: Ellie Isaac

Senior Editor

Annual UK house price growth has slowed to 7.8%, bringing the average house price to £261,600.

The last 3 months has been the slowest rate of quarterly price growth (0.7%) since February 2020 as fewer people look to move.

At this stage, there have been no price falls in major cities or regions in the last three months. 

But we expect this to change, and we’ll soon see quarterly growth of 0% and then house prices falling in 2023.

“We still expect house price falls of up to 5% next year with 1 million sales and mortgage rates dipping below 5%,” says Richard Donnell, Director of Research and Insight at Zoopla.

“But the number of sales going through will remain buoyant for a range of structural, demographic and economic factors.”

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More sellers are reducing their asking prices

A widespread repricing of homes for sale is already happening.

1 in 4 sellers have reduced the price on their home since 1 September while 11% have reduced their price by 5%+.

However, they’re relatively modest price reductions compared to historic data and there are still fewer price reductions than in 2018.

This signals a return to normal pre-pandemic market conditions rather than giving cause for concern about a housing market crash.

It's a property market shake-out, not a property market crash

Price reductions have been the greatest in the south of England where the number of sales has also fallen the most.

In the South East and East of England, almost 1 in 3 homes for sale have had their asking price reduced since the start of September.

A bar chart showing the level of asking price reductions across the UK regions

Scotland’s market operates differently, with homes marketed with a survey and valuation and asking prices set on the basis of ‘offers over’.

Sellers are less likely to achieve asking price in the final sale

Homes for sale are being reduced in price – but what’s happening to the prices people actually sell for?

Buyers are starting to get bigger discounts from sellers, with the average discount widening to 3% in recent weeks.

Whereas sellers could expect to achieve 100%+ of their asking price in 2021 and 2022, the tide is turning in favour of buyers.

Chart showing the proportion of asking price achieved dips to around 97% in October and November 2022

We expect discounts to increase further but, after exceptionally strong house price growth since the pandemic, most sellers will have a little room to reduce their price and achieve a sale.

The outlook for the housing market in 2023 really depends on how willing and able sellers are to adjust their asking prices to what buyers are prepared to buy.

Greater choice returns to the housing market

House price growth slows down in major UK cities

The rate of quarterly house price growth has slowed across major cities in the UK.

A chart comparing lower quarterly price growth in UK cities in the last 3 months compared to the average over previous 4 quarters

Comparably affordable house prices in cities like Nottingham, Birmingham and Manchester have encouraged demand and seen them enjoy above-average price growth over the last year.

More affordable markets can also expect to weather the turn in the market better than areas in the south. Below-average house prices will continue to support home moves while more expensive markets will be more impacted by higher mortgage rates.

UK map showing house price growth in regions and cities of the UK

We try to make sure that the information here is accurate at the time of publishing. But the property market moves fast and some information may now be out of date. Zoopla Property Group accepts no responsibility or liability for any decisions you make based on the information provided.