As widely predicted, the housing market has continued to weaken in the last few months of 2022. With increased interest rates and a recession on the horizon, the residential property sector is going to be impacted.
2022 Review
We have compiled the data from RICS UK, Halifax and Nationwide, alongside the latest price index data from the Government, to provide a comprehensive overview of the current UK housing sector.
“The December 2022 RICS UK Residential Survey results point to a further weakening in sales market activity to end of the year. Indeed, metrics tracking sales, instructions and price trends all slipped deeper into negative territory over the month. Moreover, forward-looking indicators suggest housing market activity will remain on a downward trajectory over the coming months.” – RICS UK Residential Market Survey December 2022
In summary, RICS UK conclude:
- Buyer demand still falling, resulting in fewer sales being agreed
- National house price net balance continues to retreat
- Twelve-month price and sales expectations indicative of further declines in the year ahead
Halifax House Price Index
“The housing market was a mixed picture in 2022. We saw rapid house price growth during the first six months, followed by a plateau in the summer before prices began to fall from September, as the impact of cost-of-living pressures, coupled with a rising rates environment, began to take effect on household finances and demand.” Kim Kinnaird, Director, Halifax Mortgages.
In summary, Halifax identified:
- Average house price fell by -1.5% in December (vs. -2.4% in November)
- Annual rate of growth dropped to +2.0% (from +4.6%)
- Typical UK property now costs £281,272 (down from £285,425 last month)
- Rate of annual growth slowed in all nations and regions during December
- The Halifax House Price Index hits 40-year anniversary, with house prices up 974% since early 1983
Nationwide
Commenting on the latest data, Nationwide Chief Economist, Robert Gardner said:
“December saw a further sharp slowdown in annual house price growth to 2.8%, from 4.4% in November. Prices fell by 0.1% month-on-month – a much smaller decline than in the previous couple of months. However, December also marked the fourth consecutive monthly price fall – the worst run since 2008, which left prices 2.5% lower than their August peak (after taking account of seasonal effects).”
In summary, Nationwide stated:
- Fourth consecutive monthly decline drives annual house price growth down to 2.8% in December
- All regions record a slowdown in annual price growth in the final quarter of the year
- East Anglia the strongest performing region in 2022, while Scotland was weakest
- Gap between weakest and strongest regions smallest since Society’s regional indices began in 1974
- Since Q1 2020, price growth in detached properties was around double that of flats
Government Land Registry House Prices Index – September 2022
| Region / County | 1 Month % | 3 Month % | 6 Month % | 12 Month % | 24 Month % |
|---|---|---|---|---|---|
| England | -0.16% | 0.79% | 5.05% | 10.88% | 20.07% |
| Wales | -1.62% | 0.29% | 4.43% | 10.73% | 23.41% |
| London | 0.12% | -0.78% | 3.40% | 6.32% | 9.66% |
| South East | -0.46% | 0.43% | 4.65% | 10.02% | 19.52% |
| South West | -0.32% | 0.59% | 4.80% | 11.78% | 23.41% |
| West Midlands Region | 0.52% | 2.61% | 6.77% | 12.76% | 22.69% |
| East of England | 0.62% | 1.47% | 5.32% | 10.19% | 21.69% |
| East Midlands | 0.23% | 0.91% | 5.73% | 12.18% | 22.43% |
| North West | 0.41% | 2.00% | 6.77% | 13.47% | 23.87% |
| Yorkshire & The Humber | -0.70% | 0.59% | 4.24% | 11.37% | 19.19% |
2023 – The Year Ahead
As we enter the new year, experts still see further reductions in house prices, supply and demand, but it is not all doom and gloom. Interest rates have started to stabilise and even inflation saw a small decline, indicating 2023 could see a turn of fortune.
Damien Druce, Commercial Director Black & White said:
“As a specialist short-term lender, we continue to see high demand for Bridging and Development Finance products. Even with the anticipated reduction in house prices, some developers and investors may see buying opportunities to add to their portfolios, or to profit from once the market has turned.”
“Inflation, cost-of-living and interest rates will impact those on term debt (mortgages) more than our sector. Whilst the cost of borrowing has increased, it has been proportionately less than the overall market.”
Kim Kinnaird, Director, Halifax Mortgages said:
“As we enter 2023, the housing market will continue to be impacted by the wider economic environment and, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall, with house prices forecast to fall around 8% over the course of the year. It’s important to recognise that a drop of 8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.”
Nationwide Chief Economist, Robert Gardner said:
“Longer-term interest rates, which underpin mortgage pricing, have returned towards the levels prevailing before the mini-Budget. If sustained, this should feed through to mortgage rates and help improve the affordability position for potential buyers, as will solid rates of income growth (with wage growth currently running at a c.7% pace in the private sector), especially if combined with weak or negative house price growth.
“But the main factor that would help achieve a relatively soft landing (especially for house prices) is if forced selling can be avoided, and there are good reasons to be optimistic on that front.
Are you a broker, looking to utilise a lender who is truly transparent? Do you have an investor looking at their next auction purchase? Identified a renovation project, but unsure how to finance it? Contact us today on 0117 937 4333 or send an enquiry to enquiries@blackandwhitebridging.co.uk to find out how we can assist.
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Sources: Index data taken from Government Land Registry House Price Index – Dec 2022, December statistics taken from Halifax House Price Index, Nationwide House Price Index, RICS UK Market Survey
