Over the past year, house prices in the UK have witnessed record growth. However, new figures from Rightmove show that prices have dropped in November.
So how much have they dropped? Is this just a temporary blip? Or could the house price bubble be about burst? Let’s take a look.
What is happening to house prices?
According to Rightmove, the average asking price for a home fell by more than £2,000 in November. The data shows that the average price of a home is currently £342,401, which is 0.6% (£2,044) less than in October.
This is the biggest monthly drop since January, when asking prices fell by 0.9%.
Could the housing bubble be about to burst?
Experts have consistently predicted that house prices will continue to rise for the foreseeable future. So, does the November dip in prices mean that the experts are wrong? Could the housing boom be coming to an end?
Well, not exactly. According to Rightmove, the Christmas period is typically quieter in terms of buying activity.
Tim Bannister, Rightmove’s director of property data, says: “Sellers who come to market this close to the distractions of Christmas often have a pressing reason to sell, so naturally price more attractively to grab the attention of prospective buyers who may be otherwise occupied.“
That could explain why average prices fell in November.
However, according to Bannister, the dip is unlikely to last for long: “We expect this downward price trend to be relatively short-lived, though sellers who are in a hurry will continue to need to attract buyers for most of December as well.”
Bannister adds that as soon as Christmas is out of the way, there is likely to be a boom in people searching for property, beginning on Boxing Day.
He explains that the post-Christmas rush “is likely to push prices higher again, and increase the competition from other buyers”.
Should you buy a house now?
For buyers currently searching for a new home, the period between now and Christmas could prove to be an excellent time to snag a house before prices potentially start rising again in the new year.
In addition to getting a good deal on a house, taking the plunge now could also allow you to lock in a low mortgage rate. With the Bank of England likely to raise the base rate in the near future, low-cost mortgage deals could soon vanish.
Of course, not every buyer will be able to buy right now. After all, house prices are still hovering around all-time highs despite the recent dip.
What if you’re not ready to buy right now?
If you’re not in a position to buy, the best thing you can do is continue building your deposit so that you’ll be in a strong position to buy in the future. There are products that you can take advantage of to prepare for your home-buying journey.
For example, if you are currently working hard to build a deposit, you should consider saving some of your money in a Lifetime ISA in order to enjoy a government bonus.
You can save up to £4,000 every year in a Lifetime ISA and receive a 25% top-up from the government to use towards buying your home. Lifetime ISAs are available from a wide array of providers including top investing solutions platforms like Nutmeg.
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About the author
Sean is a personal finance writer with a strong passion for helping others become more financially literate and make better financial decisions. He covers everything from credit cards to savings to investing.
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