August 2023 House Price Slump: Largest in Four Years

Sellers have slashed the price of their homes by an average of £7,000 in August 2023 as rising living costs and surging interest rates have eaten into family budgets.

Property portal Rightmove says the average cost of a home slipped to £364,000, with the typical asking price down two per cent since May, which was the peak of the market.

The fall was the largest to hit the market in four years.

The number of agreed sales was down 15% - the lowest since 2019.

Rightmove explained that the market could be worse as the low number of properties for sale was 10 per cent below pre-COVID levels and bolstered the market.

“While a 1.9 per cent drop in just one month seems dramatic, it’s in part an expected seasonal drop as sellers coming to market realise that they have to compromise on price due to the traditionally quieter summer holiday period,” said Tim Bannister, Rightmove’s director of property science.

The market is worse in London.

Elsewhere, house price data from the Office of National Statistics (ONS) shows house prices are slowing, too. However, the figures apply to June and lag behind most other analyses.

The ONS set the price of an average home at £288,000 in June, which is £5,000 higher than a year earlier but £5,000 lower than the November 2022 market peak.

The most significant annual price rise was 4.7 per cent in the North-East, while the lowest was a drop of 0.6 per cent in London.

The figures differ from Rightmove because they relate to sale prices, not asking prices, which tend to be higher.

House prices in Wales rose 0.6 per cent in the year to June, says the ONS, dropping from 1.6 per cent in the 12 months to May. The average house price in Wales in June was £213,000.

What the lenders say

Two of Britain's biggest mortgage lenders - Halifax and Nationwide - have agreed house prices are falling in their data for July.

The Halifax posted numbers showing house prices were down 2.4 per cent for the year, with the cost of an average home sitting at £285,044.

The monthly fall was 0.3 per cent and the fourth decrease in a row, knocking another £1,000 off the price of an average home.

Meanwhile, figures from Nationwide echoed those from the Halifax. The building society saw a 0.2 monthly fall in house prices and a 3.8 per cent annual drop - picking up from a 3.5 per cent decrease in May.

House Price Digest FAQ

The figures for average house prices and movements in property values can be confusing if you need to learn how to read the data.

Here are some of the most asked questions about house price indices.

Why are the average property prices different in each report?

The reports use other data to draw conclusions and take the data from different periods.

Nationwide and Halifax base their indices on customer data, which are much smaller samples than the national data analysed by the ONS.

Acadata's methodology includes analysis that no other index uses.

Each organisation collects data over different periods, making a direct comparison difficult.

What is the average house price?

There's no such thing as an average home. The figure is calculated from the total value of all transactions in the sample divided by the number of homes changing hands.

What are the asking and sale prices?

The asking price is the amount an owner wants to achieve from a house sale, while the sale price is the negotiated amount the buyer pays.

Which house price index is the best?

All have flaws because of the restricted data, but the one with the broadest sample comes from the ONS. Unfortunately, the ONS data is usually the last to market and out of date by two to three months on publication.