Start of the slowdown? Land Registry records monthly ...

New Land Registry data is set to kick-off the debate about whether house prices have started to fall.

Plenty of commentators are expecting house price drops ranging from 10% to 30% and now official figures show property values fell for the first time last year between October and November 2022.

The Land Registry House Price Index shows property values fell 0.3% on a monthly basis to £294,910.

Annual growth also slowed from 12.4% to 9.8%.

House price annual growth was strongest in the North West where prices increased by 13.5% in the year to November 2022, according to the figures.

The lowest annual growth was in Scotland, where prices increased by 5.5% annually.

London was the English region with the lowest annual growth, where prices increased by 6.3% in the 12 months to November 2022.

It is the first monthly decline for 13 months.

James Forrester, managing director of estate agent Barrows and Forrester, said: “The first monthly reduction in house prices in 13 months is sure to spur panic and predictions of a property market collapse, but to do so based on just one month is quite frankly ludicrous.

“The reality is that the property market has well and truly weathered the storm caused by the incompetence of the UK government and remains in fine form despite a very marginal reduction in property values.

“If we were going to see a notable dip, it would have materialised by now. This hasn’t been the case and while the heat of the pandemic market boom may have subsided, property prices remain considerably higher than they were this time last year.”

Jeremy Leaf, north London estate agent and a former RICs residential chairman, added: “This most comprehensive of all the housing market surveys always commands attention. However, the figures mainly reflect what was happening in the quieter period between September's disastrous mini-Budget and the lead up to Christmas.

“On the ground, since our return to work nearly three weeks ago, we have noticed the release of some pent-up demand now mortgage rates have begun to fall.

“Activity has been supported by gloomy predictions for prices in the media, which has reduced buyer and seller expectations and resulted in agreed sales at more realistic levels.”

However, Charlotte Nixon, mortgage expert at Quilter, said the UK must brace for further house price drops as increased energy bills will still cause financial strain for millions in the upcoming months.

She said: “As a result, many might be more hesitant to move and incur all the expense that comes with it.

“The Financial Conduct Authority estimates that 750,000 people are at risk of defaulting on their mortgage and these people may be looking to sell up to release equity in their home and avoid getting into financial difficulty.

“This could lead to an increase in housing stock when demand is depressed, causing house prices to drop lower.”

There are more positive signs in the mortgage market though with lower inflation meaning interest rates may stabilise, Nixon said.

She added: “Lower inflation should mean interest rates stabilise and even start to drop with mortgage rates following suit. This could result in mortgage rates dropping to 4% by the end of the year as the new norm, and potentially even lower in the future.

“Additionally, as the housing market cools, lenders may have to compete more for business, leading to lower mortgage deals for customers.

“This new market environment may make certain mortgage products, such as tracker mortgages, a more attractive option for short or medium-term buyers. Although a drop in house prices might come as bad news for homeowners it, this change in direction might be relatively short lived and as the economy improves, it is likely that the demand for housing will continue to outpace supply, driving up house prices in the long term.”

Nathan Emerson, chief executive of agency trade body Propertymark, said: “In November, our agents reported a market that was on the cusp of seeing purchasing power handed back to buyers which was a trend we hadn’t seen in months.

“Interestingly, estate agents in London are reporting buyers agreeing sales at under the asking price, however agents in the North West are seeing properties sell for asking price very quickly after being marketed, sometimes in a matter of days. Buyers are looking for more affordable properties, if sellers are realistic with their pricing, there are plenty of serious buyers out there that will move quickly.”