£14 House Price Change Signals Market Pause
The housing market paused during January 2023, with little or no price movement in most neighbourhoods.
Property portal Rightmove says the asking price for homes changed by £14 to an average of £362,452 from January to February.
The home selling website added sellers are more realistic about prices, confirming this is the first time prices have been so flat since records started two decades ago.
While prices are not moving, plenty of activity is going on in the housing market, says Rightmove, as the number of potential buyers is up 11 per cent in the past two weeks, compared with the 'more normal' pre-COVID market.
But sales are still down.
Agreed sales are 11 per cent down on 2019 levels, rebounding from 15 per cent down at the start of the year and 30 per cent down straight after former Prime Minister Liz Truss's controversial mini-budget.
Sellers break with tradition
Rightmove director of property science Tim Bannister said:
“The big question was if new sellers would increase their asking prices as has been the yearly norm as we approach the spring selling season.
“This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint.”
The latest official house price data from the Office for National Statistics (ONS) was released on February 15 but lagged the Rightmove report by a month - with figures relating to December 2022.
The data shows a slowing house market, with annual inflation dropping from 10.6 per cent in November to 9.8 per cent in December.
The ONS says the average house price was £ 294,000 in December - £26,000 up on a year earlier but below the £296,000 record price reported in November.
Nationally, house prices in England and Wales rose 10.3 per cent, and those in Scotland 5.7 per cent.
House prices where you are
The East Midlands had the highest percentage price change of 12.3 per cent. The lowest rise was 6.7 per cent in London.
However, the capital still has the highest regional average house price - £542,911. The cheapest average home price in the North East reached £163,731.
House price history for your neighbourhood
Use this interactive map to assess how your property investments have performed. Input the town name, and the map does the rest.
Source: ONS and Land Registry
Zero price growth
Another popular house price report from The Halifax echoes the ONS data, placing house price growth at zero while prices put on 1.9 per cent in January - the slowest growth figure for three years.
Kim Kinnaird, Halifax Mortgages director, said:
“The start of 2023 has brought some stability to UK house prices, with the average house price remaining largely unchanged in January at £281,684, a small decrease on December.
“We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years. As we move through 2023, that trend will likely continue as higher borrowing costs lead to reduced demand.
“For those looking to get on or up the housing ladder, confidence may improve beyond the near term. Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home buying affordability over time.”
Nationwide also reports slowing house price growth, with values down to 1.1 per cent in January from 2.8 per cent in December.
Nationwide's Chief Economist, Robert Gardner, said:
“There are some encouraging signs that mortgage rates are normalising, but it is too early to tell whether activity in the housing market has started to recover.
“The fall in house purchase approvals in December reported by the Bank of England largely reflects the sharp decline in mortgage applications following the mini-Budget.
“It will be hard for the market to regain momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks.”
House price digest FAQ
The figures for average house prices and movements in property values can be confusing if you don't know how to read the data.
Here are some of the most asked questions about house price indices.
Why are the average property prices different in each report?
The reports use different data to draw conclusions and take the data from different periods.
Nationwide and Halifax base their indices on customer data, which are much smaller samples than the national data analysed by the ONS.
Acadata's methodology includes analysis that no other index uses.
Each organisation collects data over different periods, making a direct comparison difficult.
What is the average house price?
There's no such thing as an average home. The figure is calculated from the total value of all transactions in the sample divided by the number of homes changing hands.
What are the asking and sale prices?
The asking price is the amount an owner wants to achieve from a house sale, while the sale price is the negotiated amount the buyer pays.
Which house price index is the best?
All have flaws because of the restricted data, but the one with the broadest sample comes from the ONS. Unfortunately, the ONS data is usually the last to market and out of date by two to three months on publication.
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