House Price Watch June 2023
Annual house price growth and transactions fell again this month and remain at a ten year low. Longer term interest rates, and in turn mortgage rates, have increased sharply in recent months in response to data indicating underlying inflation is not moderating as fast as expected. The sharp increase in borrowing costs is resulting in further falls in buyer demand and more sellers accepting below asking price offers to achieve a sale. With the continued squeeze on household budgets, further downward pressure on house prices and transactions is still expected.
What’s happening nationally
House prices remained stable this past month but are down on average -1.4% in the past year.
Most of the indices are showing stable or falling house prices over the past month and all the indices note a slowing of the annual rate of growth with Nationwide and Halifax reporting a continued fall in house prices over the past year.
Indices based on:
Land Registry – registered property transactions in May.
Nationwide & Halifax – mortgage valuations in June.
Rightmove – asking prices posted on Rightmove in June.
*Rightmove is not included in the index average as the basis for its index is different (asking price vs agreed sale price)
| Index reports: | Monthly change | Annual change |
|---|---|---|
| Land registry | +0% | +1.9% |
| Nationwide | +0.1% | -3.5% |
| Halifax | -0.1% | -2.6% |
| Rightmove | +0% | +1.1% |
| Average change | 0% | -1.4% |
House prices in your area
Most areas in England and Northern Ireland experienced a fall in house prices compared with last month, although the rate of annual house price growth continues to slow across the country.
Average house prices are highest in London (£526K) and lowest in the North East (£159K).
House price growth is similar across property type. Detached (+2.3%), semi detached (+1.4%), terraced (+1.6%) and flats/ maisonettes (+2.3%) according to May Land Registry data.
| UK Region | Average price £ | Monthly change | Annual change |
|---|---|---|---|
| England | |||
| Nothern Ireland | |||
| Scotland | |||
| Wales | |||
| North West | |||
| Yorkshire and The Humber | |||
| North East | |||
| West Midlands | |||
| East Midlands | |||
| South West | |||
| East of England | |||
| South East | |||
| London |
| UK City | Average price | Annual change |
|---|---|---|
Market Monitor
There were 80K transactions in May, down 3% on April 2023 and 27% lower than May 2022. 80K transactions is the lowest transaction level seen in 10 years (other than the initial Covid period in 2020).
Demand continues to fall and new instructions from sellers are relatively steady this month. Average stock per agent is up slightly month on month.
Time to sell is steady at approximately 55 days, slower than the average of 46 days over the last 12 months.
How busy is the market?
- Not busy
- Normal
- Very busy
- Transactions down in May, ten year low (apart from Covid 2020)
- Total transactions in May 80K
- -3% from last month
- -27% from May last year
Homes for sale vs homebuyers
- Good availability of homes
- Normal
- Shortage of homes
- Buyer enquiries continue to fall(-45% RICS); lowest demand for 8 months
- Seller enquiries steady (-1% RICS)
- Average stock per agent 49; up from 47 last month (incl under offer/ Sold STC Rightmove)
Average speed of sale
- Fast
- Normal
- Slow
- 55 days to find a buyer, steady (12 month average 46 days Rightmove)
What the experts say
Rightmove - agent's view
“Average new seller asking prices fall by £82 (-0.0%) this month. This is the first monthly drop in new asking prices this year, and the first at this time of year since 2017. On average over the previous ten years, we have seen an increase of 0.6% in asking prices at this time of year, indicating that buyer affordability constraints and more pricing realism from new sellers have brought forward the usual summer slowdown. There have been some significant increases in fixed mortgage interest rates over the last few weeks following stubbornly high inflation figures, piling pressure onto already very stretched budgets. These increases in rates and monthly mortgage payments may mean that some have to pause their plans for now. However, Rightmove’s latest snapshot of the market suggests the immediate impact on activity has been limited with most movers determined to carry on if they can still afford it.”
Nationwide
“Longer term interest rates have increased sharply in recent months in response to data indicating underlying inflation is not moderating as fast as expected. Longer term borrowing costs have risen to levels prevailing in the wake of the mini-Budget, but this has yet to have the same negative impact on sentiment — the number of mortgage applications has not yet declined. The sharp increase in borrowing costs is likely to exert a significant drag on housing market activity in the near term. For a representative first-time buyer earning the average wage and buying the typical property with a 20% deposit, mortgage payments as a share of take-home pay are well above the long-run average. Moreover, house prices remain high relative to earnings, and as a result, deposit requirements are still a significant barrier. A 10% deposit on a typical first-time buyer home is around 55% of gross annual income. Nevertheless, a relatively soft landing is still possible, providing the broader economy performs as we (and most other forecasters) expect.”
Halifax
“The average UK house price fell slightly in June. This was the third consecutive monthly fall, albeit it a modest one. These latest figures do suggest a degree of stability in the face of economic uncertainty, and the volume of mortgage applications held up well throughout June, particularly from first-time buyers. That said the housing market remains sensitive to volatility in borrowing costs. Concerns about persistent inflation have led to a significant increase in the cost of funding. The resulting squeeze on affordability will inevitably act as a brake on demand, as buyers consider what they can realistically afford to offer. How deep or persistent the downturn in house prices will be remains hard to predict. Consumer price inflation is likely to come down in the near term as energy and food prices look set to reverse their steep rises, but core inflation is clearly proving stickier than originally expected. With markets now forecasting a peak in Bank Rate of over 6%, the likelihood is that mortgage rates will remain higher for longer, and the squeeze on household finances will continue to put downward pressure on house prices over the coming year.”
Zoopla (Hometrack)
“After a better-than-expected start to 2023, the affordability dynamics for home buyers have deteriorated over recent weeks. Stubbornly high inflation has spooked financial markets with expectations that UK interest rates peak at 6%. Mortgage rates have increased by over 1%, now averaging between 5%-6%, compared to less than 4.5% this Spring. Our data shows 14% fewer buyers in the market over the last 4 weeks than the 5 year average. And, we have seen a jump in sellers accepting bigger discounts on asking prices recently. More than two-fifths of sellers (42%) are having to accept offers more than 5% below asking price and 15% are accepting discounts greater than 10% below asking price. Aside from weaker economic growth, the main downside risk to house prices is a surge in the supply of homes for sale. There are signs supply is starting to grow at an above-average rate with 18% more homes listed for sale in the last 4 weeks than the 5-year average. UK house prices remain on track to fall by up to 5% over 2023.”
RICS
“The results of the June 2023 RICS UK Residential Survey point to a renewed deterioration in sales market activity. This is on the back of the recent escalation in interest rate expectations. Indeed, as borrowing costs increased, many of the survey’s indicators fell deeper into negative territory this month, albeit most metrics remain at least somewhat above the lows hit towards the end of last year.”
