Are house prices going down?
What nine official signals say about house prices going down or up in the UK today, why the answer depends on where you look, and what a fall would mean for your mortgage.
Quick answer
It depends on where you look and how you measure. House prices can rise in pounds while falling after inflation, and London and the South East can move differently from the rest of the UK. The clearest early signs of house prices going down are mortgage approvals, wages after inflation and mortgage rates: when approvals fall and borrowing gets more expensive, prices usually come under strain. Theo’s housing market reading tracks nine of these signals and shows how many point to strain today.
Updated today
Housing market today
Reading today’s signals
Six levels, from Easing fast to Severe. Theo lights the gauge up to today’s level.
- Easing fast
- Easing
- Steady
- Building
- High
- Severe
The housing signals
- Loading signals
- Mortgage approvalsDemand from buyers
- House pricesMeasured after inflation
- London and South EastTracked separately
- UnemploymentJobs and forced sales
- Deals ending soonOwners facing new rates
- ArrearsBorrowers behind on payments
- RepossessionsHomes taken back by lenders
- Housing and policy eventsConfirmed policy changes
- PayWages after inflation
Theo’s read
Loading today’s read.
Every weekday Theo writes a plain English read of what moved in the housing market and what it has usually meant for prices.
Your equity, tracked
Theo shows how much of your home you own and how that changes.
What house prices going down does to your loan to value
| Change in value | Home value | Loan to value | Band |
|---|---|---|---|
| No change | £300,000 | 80.0% | 80% |
| 5% fall | £285,000 | 84.2% | 85% |
| 10% fall | £270,000 | 88.9% | 90% |
Housing market reading
How many of Theo’s housing signals show the market under strain today.
Early signs of house prices going down
These are the forces that usually decide whether prices rise or fall, and the ones to watch for the first signs of house prices going down.
Mortgage rates and affordability
Most buyers need a mortgage, so the monthly cost of borrowing sets what they can pay. When mortgage rates rise, buyers can afford less and prices come under pressure. When rates fall, demand usually picks up.
Mortgage approvals
The number of mortgages approved for house purchase is one of the earliest signs of demand. A sustained fall in approvals usually comes before slower price growth.
Pay and jobs
When wages grow faster than inflation, households can afford more. Rising unemployment does the opposite and can lead to forced sales.
Supply and forced sellers
Prices fall fastest when many owners have to sell at once. Arrears, repossessions and the number of fixed deals ending soon show how much pressure is building on existing owners.
Policy and tax
Changes to Stamp Duty and other taxes, and government schemes for buyers, can pull purchases forward or hold them back.
In pounds or after inflation
A home that rises 2% in value in a year when prices in general rise 4% has fallen in real terms. Headline house price figures are usually quoted in pounds. Theo’s house price signal is measured after inflation, which is why it can show house prices going down in real terms when headlines show a small rise.
Where you live matters
The UK does not have one housing market. London and the South East have different buyers, prices and pressures from Scotland, Wales, Northern Ireland and the North of England, so they often move at different speeds and sometimes in different directions. Theo tracks London and the South East as a separate signal for that reason.
What house prices going down means for your mortgage
If your home’s value falls, your loan to value rises, even though you owe the same. The table above shows how a 5% fall can move a mortgage from the 80% band to the 85% band, where rates are usually higher. If your home is worth less than you owe, you are in negative equity, which can make it harder to remortgage with a new lender.
A fall in prices does not change your current mortgage or payments. It matters when you remortgage or move. Theo tracks your loan to value band and how much of your home you own, so you can see where you stand before your deal ends.
Common questions
Are house prices going down in the UK?
Will house prices crash?
How do falling house prices affect my mortgage?
What is negative equity?
Where do Theo’s housing figures come from?
Keep exploring
Theo App Ltd is not authorised by the Financial Conduct Authority and does not give mortgage advice. This page is information only and is not a recommendation. Figures marked illustrative are examples, not valuations. Speak to an FCA-authorised mortgage adviser about your own circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.