New findings from the e.surv house price index illuminate a stark reality: in just one month, average house prices have plummeted by over £1,100. This isn’t a minor fluctuation but the fourth largest monthly fall witnessed in 2023, painting a picture of uncertainty for homeowners and potential buyers alike.

But what’s precisely nudging this domino effect in the property market? e.surv, a prominent chartered surveyor company, points the finger at an element that’s all too familiar to most of us: the escalating expenses of securing a mortgage.

Climbing Costs: The Mortgage Dilemma

“The dramatic dip in house prices can be primarily attributed to the increasing burden of mortgage finance, compounded further by the strain on disposable incomes due to the rising cost of living,” explains Richard Sexton, a director at e.surv.

It’s worth noting that among the UK’s leading lenders, the prevailing mortgage rate for a 5-year fix at a 75% loan-to-value ratio (LTV) hovers around 5.1%. While this is the lowest since July 2023, according to the Bank of England, it still presents a significant hurdle for many households.

However, there’s a glimmer of hope. With the halt in hikes to the base rate and intensifying competition among mortgage lenders, we might start seeing previously hesitant buyers re-entering the market. Nevertheless, a substantial portion remains on the sidelines, awaiting further dips in mortgage rates or for their ideal property to hit the market.

The Geographic Divide: A Tale of Two Markets

Interestingly, this trend isn’t sweeping the country uniformly. “While areas like Yorkshire and Humber, as well as the East Midlands, are holding steady with modest house price growth, other regions aren’t faring as well,” Sexton points out. The South West, for instance, is bearing the brunt of the downturn, with a sharp 2.4% decline in annual house prices since July this year.

Looking Ahead: A Helping Hand from the Government?

With all eyes on the housing market, its trajectory is bound to be a hot topic in the run-up to the elections. And there’s talk that relief might be on the horizon, potentially announced in the Chancellor’s Autumn Statement slated for November 22nd.

“Predictions about how the market will shift are varied, but there’s consensus that we’re not heading for a total collapse. With housing emerging as a critical issue in pre-election debates, we’re likely to see measures aimed at reinvigorating the market,” Sexton speculates. This rejuvenation could manifest in various forms, from tax relief initiatives to fresh policies aimed at making home ownership more accessible.

What Does This Mean for the Average Person?

For current homeowners, the dip in property prices might be a cause for concern, particularly for those considering selling. However, for prospective buyers — especially first-timers — this could signal a more opportune moment to enter the market, provided they can find a suitable mortgage. As some experts anticipate potential governmental measures to stimulate the market, it’s crucial for both buyers and sellers to stay informed and cautiously optimistic.