UK House Price Index (April 2023)
Join us as we take a look at the UK House Price Index for April 2023, and go over the overall market, recent changes and our market outlook.
Current UK house price growth (YoY): +4.1%
Expected sales completions in 2023 (H1): 500,000+
Change in prices since October 2022: -1%
Summary
- A gentle repricing is still taking place in the housing market
- Prices are 1% lower than in October 2022 as annual inflation slows to 4.1%
- The market is in better shape than many had anticipated at the end of Q1; buyers and sellers are closing deals at a higher rate
- We anticipate 500,000 sales to be completed in the first half of 2023, putting us on track to reach 1 million sales, possibly even more in 2023
- The number of homes for sale has increased by 65% since March 2022, and mortgage rates have decreased, which is boosting sales activity
- We observe a trend in sales towards markets offering greater value for money, and we anticipate increased activity in the inner London flat market in 2023
- Demand for first-time buyers will continue to be supported by high rental inflation
Buyers are still hitting the market
More new purchases are being agreed upon as buyers continue to return to the market for sales. The demand for homes has just risen to its highest level since last October when the effects of the minibudget affected consumer spending. Demand is up 16% from this time last year.
Market conditions are improving across the board, however, some regions are performing better than others. In the most affordable regions, Scotland, Wales, the North East of England, and London continue to see above-average housing demand.
In areas where prices increased more than average during the pandemic and where prices are higher than the national average, demand is less. These markets, which include the southern half of England and the Midlands, are those where lower buying power is impacted by higher borrowing rates.
Sales figures paint a more accurate picture of market health
The number of new sales that have been agreed upon—homes sold "subject to contract"—is a more crucial sign of the market's strength. Demand is 43% lower than at this time last year, which means that sales are agreed to be down 16%, but they are still up 11% from 2019 levels and continuing to rise.
A persistent lack of available properties for sale last year drove up prices but hindered the number of purchases that were completed. Compared to last year, there are 65% more houses for sale. Compared to a low of 14 residences at this time last year, the average estate agent now has 25 homes on the market. This is a good improvement that expands buyer options, therefore sellers who are serious about relocating must set reasonable prices.
'Time to sell' higher but below 2019 levels
Since this time last year when the market was at its peak, it has taken a property 71% (15 days) longer to sell from the time it is initially listed to the time it is under offer. However, in most regions, the time to sell is still below 2019 levels.
Due to the fact that homes are advertised with a survey and value, Scotland has the shortest sales cycles at 28 days. With 44 days, London has the longest time to sell. This is proof that market activity is returning to levels seen in 2019.
Growth in house prices slows
Our indicator reveals that the increase in home prices has slowed down to 4.1% from 9% a year earlier. Since last October, the decline in our index has only been 1%. For the past three months, the quarterly growth rate has been negative. As the market continues to see quick national repricing, the rate of quarterly growth is at its lowest level since 2011.
Major cities have seen a substantial slowdown in growth, with housing price inflation falling from double digits to less than 6% from a year earlier. In London, where increasing mortgage rates are more detrimental to demand in markets with greater values, there is the weakest yearly growth.
Market outlook
The housing market is in much better form as we reach the first quarter of 2023 than many had anticipated at the end of 2022. The market may be more balanced than it has been in the last three years. All UK regions and countries are experiencing small quarter-over-quarter price declines as the market goes through a gentle re-pricing process. The good news is that deals are being reached between buyers and sellers, encouraging sales activity. Agents, lenders, and builders use it to fuel their business plans and earnings.
There is no indication that there will be a significant mismatch between buyers and sellers, which would imply that home prices and transaction volumes will abruptly decline. The most affordable markets will continue to draw demand and experience higher-than-average levels of sales.
All sellers must ensure that their pricing meets customers' expectations. You cannot afford to overprice your home if you are serious about moving.
The market has been more active as mortgage rates have decreased. Mortgage rates are anticipated to hover around 4% for the majority of 2023 and may decrease towards the end of the year. We still anticipate 1 million sales transactions in 2023, despite the fact that mortgage rates are still 2 times higher than they were in early 2018. Additionally, we predict localised housing price declines of up to 5% from peak to trough.
House Price Index
Scotland: 3.4% ^
Northern Ireland: 3.8% ^
North East: 3.9% ^
North West: 5.4% ^
Yorkshire & Humber: 5.0% ^
East Midlands: 5.3% ^
West Midlands: 5.4% ^
Wales: 5.9% ^
East of England: 3.7% ^
London: 1.4% ^
South East: 3.3% ^
South West: 4.6% ^
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