Why Do House Prices Fall?

Are house prices going to fall? Or could they rise again, and hit even higher new records?

We’ve gone from seeing the market completely shut down for two months in 2020, to the busiest-ever home-buying rush in 2021.

And we’re now in a market that’s slightly less frantic than it was, but there’s still a lot more buyers than there are homes for sale, and this is preventing prices from falling significantly.

Over the course of a more ‘normal’ year, we track what happens to the prices of homes that are coming up for sale each month.

Even with the disruption of Covid and several lockdown periods, we’ve still seen that the pattern of price rises and falls each month has been similar to previous years, and is based on seasonal demand from home-movers.

Historically, we usually see a gradual climb in asking prices in the first few months of the year. Then we see a slight drop in the summer as people go on holiday, and then they jump up a bit as we hit the autumn market. In the last few months of the year, we start to see prices fall as people think more about festive celebrations than moving home.

What’s happening to asking prices now?

In August, average asking prices fell for the first time this year, but the busy autumn months could bring potential price rises as people look to move before the New Year.

Rising energy bills and interest rates will also have an impact on the number of people able to move home in the coming months.

Right now, the average price for a first-time buyer home of two bedrooms, or less, is £224,091. For a typical three- to four-bedroom home, it’s £338,757. And if you’re looking for a bigger home with five or more bedrooms, then on average you’ll be looking at paying around £665,304.

But there are thousands of different local markets, and average national prices can’t always tell you what’s happening where you live, or where you want to buy. So the most important thing is to work out how much you can comfortably afford, and take a look at the homes for sale within your budget in the areas you’re looking to live in.

Over the past few years we’ve seen that home-hunters are expanding the search area they’re considering.

I’m looking to buy a home, should I go ahead and buy now – or wait?

Average mortgage payments are higher now than at the start of the year, because of rising interest rates. But over the past decade, average rental payments have risen more than mortgage payments.

If you’ve managed to save enough for a deposit, and you can pass the criteria required by a lender, then now could be a good time to start your home search.

I’m looking to sell, will I be able to find a buyer?

Autumn is traditionally a good time to come to market, as we see a jump in buyers starting to think about moving to a new home in the New Year. It can take a couple of weeks to get your home ready to sell. The first step is to arrange for a few estate agents to value your home.

Whatever stage of the home-moving journey you’re in, we’re here to help.

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