Market prices; the ups and downs of homes in the UK

More than a third of UK homes have lost value in the last 6 months, wiping £85 million from the housing market.

That’s 11.1 million properties that are less expensive than they were last November, each losing an average of £7,700.

But UK homes are split almost equally between those gaining value (32%), those seeing no real change (30%) and those losing value (38%) over the last six months.

  • Over the last 6 months, 11.1 million or a third of UK homes have decreased in value by at least 1%

  • Larger detached homes and bungalows are more likely to be falling in value than any other property type

  • Some coastal areas in the South of England are seeing more than 65% of their homes lose value

  • Across UK regions, home values are falling the most in the South of England, Scotland and Northern Ireland

  • If you want to buy a home that’s dropping in value, think about the risk of negative equity and the impact of higher mortgage rates

So what types of properties are losing the most value? Are detached houses finally better value for money?

And where exactly should you look if you want to get a bargain?

We’ve got all the answers for you, whether you’re looking to buy your first house or your forever home.

Which kinds of properties are losing value in June 2023?

The search for space has well and truly dwindled, and more larger homes are losing value than smaller ones in the UK.

Over the last 12 months, buyers have been scaling back their home requirements as the economics of buying a home have become more challenging.

It’s in stark contrast to 2020 to 2022, when extra space became the top need for buyers and high demand for larger properties boosted their value growth.

If you want to up-size from a smaller home, flat or terraced house, your current home should hold its value and you’re more likely to get money off a larger home.

43% of detached houses have fallen more than 1% value

Detached houses are losing value more than any other property type in the UK, with 43% losing at least 1% in the last 6 months.

Detached homes with falling values are most common in the St Albans, Perth and Worcester areas, where they make a 9 in 10 of such homes.

7 in 10 bungalows fall in value in the last 6 months

Bungalows account for 8% of all UK homes and 7 in 10 bungalows have recorded a fall in prices since November 2022.

Coastal areas such as Brighton, Norfolk and Southend-on-Sea are seeing the most hits to bungalow prices.

Homes losing value in the South of England, Northern Ireland and Scotland

In some respects, home values are more about where you want to buy a home, rather than what sort of house you want to live in.

The South of England, Northern Ireland or Scotland have the highest proportions of homes losing value, giving buyers the opportunity to buy at a lower price in these locations.

On the other hand, the most homes are rising in value in Northern England, Wales and the Midlands.

The top 10 locations where homes are losing value

While some regions are faring better than others, there’s a lot of complexity in the current UK housing market.

Home values move in different directions within different local contexts, such as the state of the local economy, local facilities and types of homes.

For example, West Central London is seeing a huge 68% of its homes lose value, with an average fall of £13,000 since November 2022.

One key trend we’re seeing is a fall in property values in coastal locations in the South of England.

67% of properties in Colchester (109,000 homes) have lost value by more than 1% in the last 6 months, while 66% have fallen in value in Canterbury.

Many homes in Norwich and Southend-on-Sea have also lost value – 64% and 62% respectively – while 63% of Brighton properties have lost value since November 2022.

Torquay and Truro in the South West also make the list, with 59% of homes in these areas declining in value over the last 6 months.

Buying a home that’s falling in value: what to think about

Your first thought when you see that home values are falling might be that it’s a good time to buy and get a bargain.

This is true to an extent, but you’ll also need to consider any potential for negative equity, as well as the fact that you’re likely to pay a higher mortgage rate now.

Negative equity unlikely with 5% house price falls this year

Our data suggests that house prices will fall by 5% over the course of 2023.

That means you’re unlikely to move into negative equity if you were to buy today – as long as your loan-to-value ratio is lower than 95%.

However, it’s worth knowing that the years of strong price growth are behind us.

It’s always best to buy your next home based on your personal needs and circumstances, rather than looking to make gains or play the market.

A high fixed rate might be worth a lower property price

Higher mortgage rates might be limiting your move right now, and understandably so.

Buying power is hit by up to 20% with a 6% mortgage rate compared to a 4% one – which is putting a strain on home buyers despite falling house prices.

Our mortgage calculator, which is included with our instant on-line valuation, can help you work out how your monthly repayments are impacted by a higher mortgage rate.

Adrian Anderson from property finance specialists Anderson Harris says a high fixed rate mortgage may be worth it now prices are falling, if you’re sure you can afford it.

“It’s usually better to purchase a property at a lower purchase price with a more expensive mortgage in the short term, than pay a higher price for a property and a cheaper mortgage in the short term.”

Always talk to a specialist mortgage advisor to understand the best option for you.

Look for value-adding potential to buck the trend

One way to offset potential price falls for a home you buy is to consider its value-adding potential.

By renovating a doer-upper, you can buy for a lower price and look to increase your return when you sell.

Get to grips with a home’s value before you buy

Every home is different. Even in places where the average house price is falling, it doesn’t necessarily mean yours will. And vice versa.

So find out if the home you’ve got your eye on is rising or falling in value.