House prices grew by 0.2% in November, taking the national annual fall to -2.0%, according to Nationwide. Revisions to September’s figures mean that this is now the third month in a row where prices have risen. 

This indicates greater stability in the market, supported by lower mortgage rates. Lenders have further squeezed their margins as they compete for business in a market with limited mortgage approvals. This has helped release some of the pent-up demand from those buyers who were holding back during the peak of mortgage rates, which has led to some modest value growth. 

An improved economic backdrop has also helped. Inflation fell more than expected in October, to 4.6%, hitting a two-year low according to the ONS, and there is growing confidence among economists that the base rate has peaked. 

But the market is not out of the woods yet, with low activity and price falls still expected in the short term. The majority of surveyors continued to report both decreasing supply and demand in October, according to the RICS survey. Demand is still weaker than supply, a dynamic that suggests house price falls will continue. The balance of opinion on prices is more gloomy than at any time since 2009.

The supply of homes for sale has returned to pre-pandemic levels, but mortgage approvals are low and there are more discounts to asking prices. The number of homes for sale was 34% higher in November than the same time last year, according to Zoopla, back at pre-pandemic levels. However, demand remains subdued. Although mortgage approvals ticked up slightly in October compared to September, they were still -27% below their pre-pandemic levels, according to the Bank of England. The combined effect has been an increase in discounting from asking prices, from an average of 3.4% during the first six months of 2023 to 5.5% in November, according to Zoopla. 

Local variation in price falls has become increasingly apparent in the more lagged Land Registry data. Just over 100 local authorities are now seeing falls, and these continue to be concentrated in London, the South East, and East of England where 66 of these authorities are located. Meanwhile, certain local markets have been more resilient as they experience continued annual price growth, including Rosendale (7.6%), Blaenau Gwent (7.1%), and Nottingham (6.6%).

Annual rental growth across the UK fell to 9.7% in October after 19 consecutive months of growth over 10%, according to Zoopla. This is the first time these figures have been in single digits since January 2022. Rental growth, however, remained high in spite of these falls, and continued to accelerate on an annual basis in many regions.