4 April 2023 – New data shows that annual house price growth has fallen by 3.1%, with house prices now 4.6% below the august peak.
Nationwide has released its latest House Price Index and the data shows that house prices have fallen and are now 4.6% below the august peak.
While the housing market has shown signs of recovering from the fallout of the mini-budget last September, the mortgage lender suggests that it is still feeling the effects of it. With the number of mortgages approved for the purchase of a property still being low.
Only 43,500 mortgages were approved in February, which is 40% lower than the same time last year, according to Nationwide.
0.8% Fall In House Prices In March
Nationwide reported that house prices have fallen by 0.8% in March. Annual house price growth has declined by 3.1%, which is the largest drop since July 2009. The average house price in the UK is now £257,122.
Every region in the UK has seen house price growth slow in the first three months of 2023. Which means that most regions are now 4.6% below their peak in August.
The lender believes that it is unlikely that we see the market take off in the next few months.
It will be hard for the market to regain much momentum in the near term since consumer confidence remains weak and household budgets remain under pressure from high inflation. Housing affordability also remains stretched, where mortgage rates remain well above the lows prevailing at this point last year.
Robert Gardner, Chief Economist at Nationwide
The Guild of Property Professionals predict that house prices will fall by 8% overall this year, based on Nationwide’s report. This means they would return to the levels from 2021.
The professional body believes that confidence in the market has returned since September, when the mini-budget caused activity to die down. Unlike Nationwide, the Guild thinks that the market will pick up again, as long as inflation is brought under control.
And while the number of approved mortgages is still weak, there was an increase recently, which the Guild of Property Professionals believes will reassure first-time buyers.
However, the cost-of-living crisis is still the main barrier for many to get onto the property ladder. And with inflation still sky-high, it is uncertain when the market will start to regain momentum.
Mortgage rates will also not reach the lows of pre-pandemic levels again, which means first-time buyers will have to accept that mortgage costs will be higher than they might have anticipated.
Buyer Demand Down In First Three Months Of 2023
The latest Homebuyer Demand index by GetAgent has shown that buyer demand has fallen by 5.7% in the first quarter of 2023. This is 23.6% lower than the same time last year.
The biggest fall in demand has been seen in Rutland, with a drop of 10.9%, compared to the end of last year. Somerset and Suffolk follow with a decline of 8.8%. Northamptonshire, Essex and the Isle of Wight have all seen a drop of 8.4%.
The only exception is London, where demand in Q1 has increased by 4.2% compared to the end of 2022.
Compared to the same time last year, every county in England has seen a decline in buyer demand. The biggest annual decline in buyer demand, with 32.7%, has been seen on the Isle of Wight.
In Lincolnshire and East Riding and Yorkshire, demand has fallen by 30.3% compared to the same period in the previous year. Buyer demand in Northamptonshire has dropped by 30.2% compared to last year.
The large declines in comparison with last year should be seen in perspective. Buyer demand last year was fuelled by the desire for more space, when working from home became the norm during the pandemic.
GetAgent’s data shows that buyer demand is still strong, with 42.6% of all homes currently listed across England already having a buyer. Demand in Bristol is strongest, where 61.1% of homes are sold subject to contract.
With over 48% of homes sold, South Yorkshire, Tyne and Wear, Wiltshire and Hampshire have also seen strong buyer demand.
The strong homebuyer demand shows that the property market overall is healthy, despite the rising mortgage rates.
The good news is that the overall health of the market remains robust and we’re still seeing around half of all homes listed being snapped up by buyers across the vast majority of counties.
Colby Short, CEO of GetAgent
The high percentage of homes on the market having a buyer signals on the one hand that sellers are pricing their homes realistically. On the other hand it points at stock levels still being on the lower side, which means buyers have less choice.
As we move into the spring market, it will be seen if the market will continue to be robust and healthy or if financial pressures will weaken demand.
