Your monthly UK housing market update – including sold and asking prices, RICS surveyor sentiment and predictions for the year ahead.
HM Land Registry – Sold Prices
In the government’s latest UK House Price Index, sold prices rose by 3.5% in the year to April 2023 – to reach £286,000.
On a non-seasonally adjusted basis, this meant average prices increased by only 0.5% between March and April. This compares with an increase of 1.1% during the same period in 2022.
While sold prices are £9,000 higher than 12 months ago, they’re still £7,000 down on the September 2022 peak. The number of property transactions was also a massive 25.1% lower than 12 months ago, although only 7.9% down (on a seasonally adjusted basis) between March and April 2023.
Casting doubt on any imminent improvements in market activity, the Bank of England reported that mortgage approvals also decreased by 5.4% – from 51,500 in March to 48,700 in April 2023.
Rightmove – Asking Prices
Average asking prices fell by £82 over June 2023. Although a small decrease, it’s the first monthly drop this year, and the first fall in June since 2017. Indeed, for the last 10 years, asking prices rose by an average of 0.6% in June.
The increases to fixed mortgage interest rates (combined with stubbornly high inflation) continue squeezing potential buyers. Despite this, demand remains high – with estate agent enquiries still 6% higher in the first two weeks of June than the same period during the more normal market of 2019. Agreed sales are 6% lower however, reflecting ongoing uncertainty over borrowing.
This disconnect between buyer demand and the reality of the mortgage market is also apparent in the rise in visitors to Rightmove’s Mortgage in Principle service. Visits were 53% up compared with before the recent rise in inflation.
RICS – Chartered Surveyor Sentiment Survey
In the latest Residential Market Survey, RICS Surveyors are cautiously optimistic. Nonetheless, they see potential clouds gathering with continued inflation and interest rate rises.
New buyer enquiries and agreed sales posted the least negative readings in the last 12 months. Buyer enquiries were -18% in May (up from -34% the month before), while agreed sales increased to -7% from the previous -18%. Reflecting more positivity, new instructions rose by a net balance of +14%. This broke the previous run of thirteen successive negative monthly readings.
Average stock levels per estate agency also picked up slightly to 38 properties, which is just below the 40 average seen over the last five years.
Equally, while sold prices decreased, downward momentum eased over May. -30% of respondents reported falls, up on the recent low of -46% in February. At the 12 month horizon, price expectations also sit at -3%, significantly up from -16% the previous month.
Zoopla – Housing Market Outlook
Zoopla note the housing market is set to be tested once again. As mortgage rates increase to over 5%, they predict constraints on buying power will result in lower sales volumes and sold prices. In fact, sales are already on track to be 20% down on the previous year.
Despite potential price falls, the risk of negative equity is small. There’s a large “equity buffer” (i.e. the amount people have paid off their mortgage and the percent of their home they own) to absorb modest declines.
Combined with increased costs of living, mortgage affordability is a major challenge for those remortgaging as well as first-time buyers. As a result, Zoopla expect a prolonged period of low house price growth. They predict this will result in a steady readjustment of house prices (to match household incomes more closely) within the next five years.
Express Index
For a full, comprehensive breakdown of current property market activity. Visit our Express Index here
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