Property experts’ reaction to latest house price falls

April 22, 2023

The first quarter of 2023 has seen a downward trend in sales listings and buyer demand.

The Royal Institution of Chartered Surveyors’ latest residential market survey reported the ninth successive negative monthly reading in January. New buyer enquiries fell to -47% from -40% the month before, making January the weakest monthly reading since April 2009. 

The latest house price data

Halifax and Nationwide’s house price index data have shown similar property price falls.

In March, Nationwide’s latest house price index reported that UK house prices fell annually for the first time since June 2020. The mortgage lender’s data showed the fastest annual decline since the financial crisis.

The first annual drop for nearly three years was recorded in February. Price growth fell 1.1% in February compared to the same month last year. March saw the steepest annual drop since 2009, with a fall of 3.1%.

This makes the average house price of a UK home £257,406, down from £258,297 in January.

“The recent run of weak house price data began with the financial market turbulence in response to the mini-Budget at the end of September last year,” said Robert Gardner, Nationwide’s chief economist. “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.”

Prices fall while mortgages stay high

Although mortgage rates have begun to drop from their peak of 6.65% in September, they still remain high at around 5%. In combination with the rising cost of living, buyer demand has plummeted to its lowest level since 2019. Sellers are reportedly reducing asking prices by as much as £14,000.

Robert Gardner commented, “Inflation has continued to outpace wage growth and mortgage rates remain significantly higher than the lows recorded in 2021.”

Sarah Coles, head of personal finance at Hargreaves Lansdown, commented: “Since the start of 2023 there has been some hope within the market that falling mortgage rates would bring more buyers back, so falls would remain in single digits, and we’d soon be back on track. This remains a real possibility. However, there are a number of factors that could derail this view. While mortgage rates are still expected to fall this year, it’s not going to be a straight line. Recent spending and wage figures are raising the spectre of higher inflation lasting longer than had been expected.”

Reaction from other property industry experts

Nathan Emerson, the CEO of Propertymark, reported: “Our member agents are reporting transaction levels year on year to be stable and listings of new properties coming to the market also being steady. With a stream of serious buyers still keen to move, and prices still higher compared to this time last year, sellers are still in a strong position to sell, however they can no longer test the market at higher prices and align with those achieved last year. Instead, they will need to reduce or be open to offers in order to get a more realistic and efficient sale.”

Iain McKenzie, CEO of The Guild of Property Professionals, commented: “With the largest annual decline in house prices since the depths of the financial crisis, homeowners may be worried about what this means for them. Unlike the financial crisis, we haven’t seen an aggressive drop-off in transactions, so the slowdown in prices has hardly been the crash that was expected. Sellers are becoming more open to negotiating with buyers on the asking price and that has the potential to skew the data. While we are forecasting an overall decrease of around 8% this year, this would only bring house prices in line with levels back in 2021.”

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