Interest rates, high inflation and cost of living are all still having an impact across the UK.
March 2023 Review
We have compiled the data from RICS, Nationwide and Halifax alongside the latest Government price index data, to provide a comprehensive overview of the current housing market position.
“The results of the March 2023 RICS UK Residential Survey continue to depict a generally weak market backdrop, with indicators on demand, sales, new listings and house prices all remaining in negative territory. Moreover, near-term expectations suggest this pattern will remain in place for a while longer amid the tighter lending environment. That said, the twelvemonth view on sales volumes has improved in the latest feedback, with respondents anticipating a more stable trend coming through further ahead.”
“Looking at new buyer enquiries, a headline net balance of -29% of contributors reported a fall in demand during March (more or less unchanged from a reading of -30% last month). When disaggregated, the downturn in buyer demand remains widespread across the UK, with virtually all regions/countries posting a negative reading in the latest returns.” RICS UK Residential Market Survey March 2023
In summary, RICS UK conclude:
- Metrics on buyer enquiries, agreed sales and new instructions all remain negative
- House prices still falling at the national level
- Twelve-month sales expectations point to a more stable trend emerging further out
Halifax House Price Index
“The UK housing market continues to show resilience following the sharp downturn at the end of 2022, with average property prices rising again in March (+0.8%). The typical house price is now £287,880, around 2% below the peak reached last August.”
“On an annual basis, house prices were +1.6% higher than a year ago, slowing from +2.1% in February. This is the weakest rate of annual growth in nearly three-and-a-half years (October 2019), having fallen markedly since June 2022’s peak of +12.5%.
“However, overall these latest figures continue to suggest relative stability in the housing market at the start of 2023 and align with many other recent industry surveys and data. This has been characterised by a partial recovery in activity and transactions, especially when compared to the significant drops seen at the end of last year, with latest Bank of England data showing mortgage approvals rising for the first time in six months.” Kim Kinnaird, Director, Halifax Mortgages
In summary, Halifax identified:
- Average house price increased by +0.8% in March (following +1.2% rise in February)
- Annual rate of house price growth slowed to +1.6% (vs +2.1% for previous three months in a row)
- Typical UK property now costs £287,880 (compared to £285,660 in February)
- House prices rose in all UK nations and regions last month, though the annual rate of growth continued to slow in most areas
Nationwide
Commenting on the latest data, Nationwide Chief Economist, Robert Gardner said:
“March saw a further decline in annual house price growth, with prices down 3.1% compared with the same month last year. March also saw a further monthly price fall (-0.8%) – the seventh in a row – which leaves prices 4.6% below their August peak (after taking account of seasonal effects).
“The housing market reached a turning point last year as a result of the financial market turbulence which followed the mini-Budget. Since then, activity has remained subdued – the number of mortgages approved for house purchase remained weak at 43,500 cases in February, almost 40% below the level prevailing a year ago (see chart below).”
In summary, Nationwide identified:
- House prices down 3.1% year-on-year in March – the largest annual decline since July 2009
- All regions saw a slowing in price growth in Q1, with most seeing small year-on-year falls
- West Midlands was the strongest performing region, while Scotland remained the weakest
Government Land Registry House Prices Index – February 2023
| Region / County | 1 Month % | 3 Month % | 6 Month % | 12 Month % | 24 Month % |
|---|---|---|---|---|---|
| England | -0.81% | 1.53% | -0.63% | 6.05% | 15.41% |
| Wales | -0.63% | -2.39% | -1.32% | 6.35% | 19.93% |
| London | -1.10% | -1.22% | -2.28% | 2.95% | 8.53% |
| South East | -1.17% | -0.94% | -0.40% | 5.82% | 16.42% |
| South West | -1.17% | -2.57% | -1.92% | 5.83% | 17.49% |
| West Midlands Region | -0.17% | 0.29% | 2.65% | 9.95% | 18.38% |
| East of England | -0.10% | -1.14% | 0.23% | 5.58% | 16.40% |
| East Midlands | -1.12% | -1.33% | -0.02% | 7.35% | 17.38% |
| North West | 0.56% | -2.56% | -0.61% | 6.97% | 15.94% |
| Yorkshire & The Humber | -0.04% | -2.51% | -0.95% | 5.55% | 14.28% |
Outlook
As we enter the second quarter of the year, the housing market will remain under pressure, due to high inflation and the ongoing cost of living impact. A recession has been avoided, which is a major positive. Interest and SONIA rates are indicating they have peaked or closed to, providing further assurance the market requires.
Damien Druce, Commercial Director, Black & White
“Despite the pressures that exist in the housing market, we are continuing to see high demand for bridging finance. Due to the flexibility and usage these products offer, brokers and their borrowers still see value in the market and are taking advantage of this.”
“With rates now stabilising, inflation dropping, albeit stubbornly, the property sector has so far, weathered a severe storm. Whilst this will remain fluid, if the cost of living really starts to ease and inflation continues to come down, we could see further momentum in the second half of the year.”
Nationwide Chief Economist Rob Gardner said:
“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. Housing affordability also remains stretched, where mortgage rates remain well above the lows prevailing at this point last year.”
Kim Kinnaird, Director, Halifax Mortgages said:
“Predicting exactly where house prices go next is more difficult. While the increased cost of living continues to put significant pressure on personal finances, the likely drop in energy prices – and inflation more generally – in the coming months should offer a little more headroom in household budgets.”
“While the path for interest rates is uncertain, mortgage costs are unlikely to get significantly cheaper in the short-term and the performance of the housing market will continue to reflect these new norms of higher borrowing costs and lower demand. Therefore, we still expect to see a continued slowdown through this year.”
Sources: Index data taken from Government Land Registry House Price Index – Mar 2023, March statistics taken from Halifax House Price Index, Nationwide House Price Index, RICS UK Market Survey
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