The charts that prove Britain's house prices are already crashing

Telegraph

12-04-2025

On the surface, house prices don't appear to have crashed. But look closer and you will see a serious slump.
In recent years, there has been a significant real-terms fall in the value of millions of homes, caused by a stagnant property market in the face of high inflation.
House prices grew just 1pc in the year to March, according to Rightmove. With a headline inflation rate of 3pc, this marks a notable decline in real house prices.
'We've essentially seen a house price crash without people realising, in real terms rather than nominal terms,' explains Aneisha Beveridge, of estate agent Hamptons.
Real terms falls
The property market has not recorded real price growth – when adjusted for inflation – since 2022, according to Nationwide's house price index and retail price index (RPI) inflation figures.
It means that house prices in real terms have fallen about £49,000 between the first three months of 2022 and the last quarter of 2024, equal to a drop of 15.6pc. This was fuelled by a period of very high inflation, hitting a 41-year high of 11.1pc in October 2022.
Real house prices peaked in 2007, climbing to £346,367 when adjusted for inflation, compared with £266,640 today.
The decline in real terms prices means the market is favouring buyers. This has been exacerbated by a glut of supply – the number of available properties for sale recently reached a 10-year high, according to Rightmove, which it said was 'reducing sellers' pricing power'.
As sellers lose both bargaining power and property value, buyers continue to seek price reductions. The Government's decision to lower stamp duty thresholds for first-time buyers and movers alike will do little to buoy a slide in real house prices. The average stamp duty bill in England will increase from £2,979 to £7,391 by 2029 – a 148pc rise – according to analysis by estate agent Hamptons.
Finding themselves in a buyers' market, sellers are being forced to cut prices. Richard Donnell, of Zoopla, says: 'Homebuyers will expect to reflect this extra cost in their offers, typically looking to split the cost with the seller.'
In 2022, just 24pc of property listings had at least one price reduction, according to analytics firm TwentyCi. This rose to 36pc in 2023, and by the end of 2024, 38pc of all completed listings had seen their price slashed.
Robert Gardner, chief economist at Nationwide, says that despite inflation pushing down the real terms value of properties, it also affects the value of mortgages.
'The real burden of debt will have changed as well. [For those with mortgages], the money you're paying back is worth less than what you borrowed in real terms.'
But many homeowners, for whom their home is their most valuable asset and a cornerstone of their retirement or future financial stability, face an uncomfortable truth: the value of their home may not be as high as they once believed.
Revising house prices
On top of this, overly generous house price indices may have fuelled unrealistic expectations.
The Office for National Statistics (ONS) bases the previous 12 months of its index on estimates. It later publishes revisions to these, which for every month since 2020 have been lower than the initial estimates by up to 11.1 percentage points.
In February's report, the ONS cut all of its previously reported house price data going back to January 1970 by 8pc compared to the previous month's report. The ONS has said it is adjusting its referencing period, but it has drawn criticism from baffled analysts.
'[The idea of re-weighting the index] makes no sense given it's a uniform 8pc cut over 55 years. We're all confused by the ONS explanation... I've never seen 55 years' worth of data revised overnight like that,' says Mark Tabrett of data analytics firm Hoola.
Previously, the Bank of England had criticised the ONS's jobs market data, and this month the Government announced it was conducting an investigation into the ONS's effectiveness.