Housing Market Update: September 2023

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 House Price Index, UK sold prices increased by 1.7% in the year to June 2023. This compares with a rise of 1.8% in the twelve months to May 2023.

On a non-seasonally adjusted basis, prices rose by 0.7% between May and June. This is pretty much the same as last year when prices increased by 0.8% during the same period.

Explaining these relatively flat price trends, the Bank of England reported weaker buyer demand and stronger supply than last year. Property transactions tell a similar story, with 85,870 completed sales over June 2023. While this is an increase of 6.1% from the previous month, sales volumes are substantially lower (-15.4%) than the same time last year.

Mortgage approvals (a good indication of future borrowing) also remained steady, with just a slight increase from 51,100 in May to 54,700 in June 2023.

Rightmove – Asking Prices

Average asking prices dropped by 1.9% over August to reach £364,895. This is a large fall for this time of year, with the traditional summer slowdown usually sitting around 0.9%.

This slowdown suggests sellers are heeding agents’ advice and pricing competitively to attract buyers dealing with cost of living pressures and interest rate rises. In fact, asking prices are now 2% (that’s £8,000) lower than May 2023!

Combined with tentative downward trends in mortgage rates and higher average earnings, this suggests buyer affordability is slowly improving. 

Even so, agreed sales are still 15% lower than the same time in 2019. Compared to the rest of the market, first-time buyer properties are performing best (at -10%). This could be down to the frenzied rental market pushing many towards mortgages. While first-time buyer property prices are 1% up on the same time last year, rents have risen by a staggering 12%.

RICS – Chartered Surveyor Sentiment Survey

RICS chartered surveyors point towards a tight lending environment weighing heavily on buyer activity. 

New buyer enquiries (-45%) and agreed sales (-44%) both remained in decline, while sold prices also fell over July 2023 (-53%). It all signals a strong downturn in buyer demand following recent mortgage rate hikes.

The supply of new properties fell significantly over July, down by -13%. This compares with just -3% in June. Casting doubt on improvements to supply any time soon, the net balance for market appraisals also sat at -37% for July.

As a result, sales expectations for the next few months remain pessimistic. They fell to -45% over July, sinking further into negative territory from June’s -38% and -11% in May. Expectations at the twelve month horizon are only marginally better at -25%.

Price expectations are similarly downbeat for the year ahead, with -49% of contributors predicting house price falls.

Zoopla – Housing Market Outlook

In Zoopla’s latest House Price Index, they see higher mortgage rates impacting the property market. Indeed, price growth has dropped to its lowest levels since 2012. Demand from buyers was also 34% lower in August 2023 than the same period over the last five years.

Even so, Zoopla expects sales to recover well in the next few years, as flexible working, a strong labour market, immigration and an ageing population looking to downsize all drive moves. Falling mortgage rates (Zoopla anticipates rates dropping below 5% later this year) will also help market activity. 
Despite this, recovery will be a lengthy process and affordability pressures are unlikely to improve until at least early 2024. This is why Zoopla isn’t optimistic about house price growth, predicting between +2% and -2% for the foreseeable future.

Express Index

For a full, comprehensive breakdown of current property market activity.  Visit our Express Index here

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