UK Housing Market: Worst Performance in a Decade

Home sales plunged by almost a third last month as rising interest rates and the cost of living continued to batter the property market.

Although 67,220 homes were sold in April, says HM Revenue & Customs, 32 per cent fewer homes changed hands than in the same month a year earlier - marking the worst April performance for the housing market in a decade.

Property experts fear the worst as the market goes through a price correction.

The latest official figures for March 2023 from the Office for National Statistics (ONS) show house prices still rising - by 4.1 per cent in the year, but down from a 5.8 per cent rise in February.

Average UK homes now cost £285,000 - £11,000 higher than a year ago but £8,000 below the recent peak in November.

House price changes where you are

Regionally, London saw the lowest percentage change in prices, recording a 1.5 per cent rise, says the ONS. The South West posted the most significant increase of 5.4 per cent. The North West was the only other region to bust the five per cent barrier with a rise of 5.2 per cent.

London retains the highest average home values in the UK at £523,000. The lowest house price was recorded in the North East, where property prices average £157,000.

What the lenders say

Britain's biggest lenders - the Halifax and Nationwide - filed differing figures for house prices in April.

Nationwide pierced the housing market's gloom by reporting prices up 0.5 per cent in April after five months of dropping.

However, that news was not good enough to reverse the annual falls but improved the mood by reducing the annual fall from -3.1 per cent to -2.7 per cent.

Robert Gardner, Nationwide's Chief Economist, said: “While annual house price growth remained negative in April, there were tentative signs of a recovery with prices rising by 0.5% during the month. April’s monthly increase follows seven consecutive declines and leaves prices 4 per cent below their August peak.

“Housing market activity remains subdued, with the number of mortgages approved for house purchase in February nearly 40 per cent below the level of a year ago, and around a third lower than pre-pandemic levels. However, in recent months industry data on mortgage applications point to signs of a pickup.”

The Halifax reports a stagnant housing market, with prices up a marginal 0.1 per cent in the year to the end of April.

Director Kim Kinnaird feels the market is stabilising.

He said: “Alongside a market-wide uptick in mortgage approvals, these latest figures may indicate a more steady environment. However, cost of living concerns remain real for many households, which will likely continue to weigh on sentiment and activity. Combined with the impact of higher interest rates gradually feeding through to those re-mortgaging their current fixed-rate deals, we should expect some further downward pressure on house prices over the course of this year.”

House price digest FAQ

The figures for average house prices and movements in property values can be confusing if you need to learn 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.