Average UK house price fell by 0.6% in January
The average house price in the UK fell 0.6% in January, according to an index.
Annual home price growth slowed to 1.1% from 2.8% in December, and typical home values are now 3.2% below their peak in August, the Nationwide Building Society said.
The average house price in the UK in January 2023 was £258,297.
The annual growth rate of 1.1% is the lowest since the first months of the coronavirus pandemic in June 2020, when house prices fell by 0.1% annually.
House prices stagnated last September with a change of 0.0%, followed by monthly declines of 1.0% in October, 1.2% in November and 0.3% in December.
Mortgage rates offered by lenders have skyrocketed after the mini-budget and borrowing costs have also risen as the Bank of England’s base rate rose.
Robert Gardner, Nationwide’s chief economist, said: “There are some encouraging signs that mortgage rates are normalizing, but it is too early to say whether housing market activity has started to pick up.
“The decline in home purchase approvals reported by the Bank of England in December largely reflects the sharp fall in post-mini-budget mortgage applications.
“It will be difficult for the market to regain much momentum in the short term as economic headwinds will remain strong, real incomes are likely to continue falling and the labor market is expected to weaken as the economy shrinks.”
He added: “If recent mortgage rate cuts continue, this should help improve the affordability position for potential buyers, albeit modestly, as should solid income growth rates, particularly when combined with weak or negative house price growth.”
“Nonetheless, the overall affordability situation is likely to remain challenging in the near term.”
Jeremy Leaf, a North London estate agent, said: “The fizz has certainly left the market, leaving more serious need-seeker buyers as opposed to discretionary buyers who are settling for more stable mortgage rates and a greater balance between supply and demand.
“Looking ahead, the outlook for property prices remains fairly stable with no dramatic changes expected.”
Gabriella Dickens, a senior UK economist at Pantheon Macroeconomics, said: “Nationwide data shows house prices continue to fall amid pressure from higher mortgage rates, depressed real incomes and weak consumer confidence.”
Phil Gamblin, founder of Cardiff-based mortgage broker Oak Financial, said: “We have seen a large number of inquiries from homebuyers and new mortgages alike, suggesting that the turmoil is easing in late 2022 and confidence is returning to the market.”
Tom Bill, Head of UK Residential Research at Knight Frank, said: “The UK housing market is poised for an annual fall in prices as mortgage rates remain significantly higher than 12 months ago.
“To appreciate how steep it is, you have to look beyond the short-term mini-budget distortion.
“For example, buyers and sellers shut down early at Christmas, but activity picked up again in January. The resilience of prices and sales volumes will be put to the test in the spring.
He added, “We expect prices to drop by 10% over the next two years as budgets are recalculated.”
Jason Tebb, managing director of property search website OnTheMarket.com, said: “With buyers having less purchasing power it will become more important to ensure property prices are good by seeking advice from an experienced local agent who has local knowledge of the area. and memorizes ever this year.”
Iain McKenzie, chief executive of the Guild of Property Professionals, said: “Home prices fell slightly again in January but some signs suggest there is hope on the horizon.
“The affordability factor is the number one concern for buyers right now, especially those just starting up the real estate ladder. Mortgage rates have gone through the roof over the past year, shifting the goalposts for savers. It looks like we are seeing some stability returning to the market.”
