The latest house price data released by HM Land Registry for March 2023 reveals that average house prices in the UK rose by 4.1% in the 12 months leading up to March 2023.
This marks a decrease from the 5.8% increase seen in the 12 months to February 2023, as well as a significant drop from the peak of 14.3% annual inflation recorded in July 2022.
The average house price in the UK stood at £285,000 in March 2023, which is £11,000 higher than the previous year but £8,000 lower than the peak in November 2022.
The Covid-19 pandemic had a noticeable impact on the supply of housing transactions for a certain period of time, as stated in Section 7 of the report, “Measuring the data.”
The provisional seasonally adjusted estimate of residential transactions in the UK for March 2023 was 89,560, reflecting an 18.9% decrease compared to March 2022 and a 1.3% increase from February 2023.
Regionally, England had the highest average house prices in the UK, with an increase of 4.1% over the 12 months to March 2023, reaching an average price of £304,000.
Scotland saw a 3.0% increase in average house prices during the same period, with the average price in March 2023 standing at £185,000.
Wales experienced a 4.8% increase, with the average house price reaching £214,000. Northern Ireland recorded a 5.0% increase in house prices over the year, with an average price of £172,000, maintaining its position as the most affordable country in the UK for property purchases.
When analysing house prices by region in England, the North East had the lowest average house price at £157,000 in March 2023.
The South West had the highest annual house price inflation at 5.4% in the 12 months to March 2023, while London retained its position as the region with the highest average house prices, with an average price of £523,000.
However, London had the lowest annual house price inflation among all English regions, with prices increasing by 1.5% in the 12 months to March 2023.
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Emma Cox, MD of real estate at Shawbrook:
“Rising interest rates and economic pressures have not stood in the way of many buyers or sellers’ ambitions as the housing market shows strong resilience and house prices rise in March.
“Reports that the economic outlook isn’t as bleak as previously forecast has prompted a return in confidence and demand. And while buyers are likely to remain relatively cautious moving forwards, as mortgage rates remain high in line with rising interest rates, it’s encouraging to see these signs of optimism back in the market.
“The well-documented lack of supply within the rental market, could prompt professional landlords to snap up properties and expand their rental portfolios before any further price rises. This should help to provide an injection of quality stock, with demand currently being starved of good, available properties for renters.”
Karen Noye, mortgage expert at Quilter:
“Government house price data today shows that house prices are once again depreciating. On a non-seasonally adjusted basis, the average UK house price has fallen for the fourth consecutive month, decreasing by 1.2% in March 2023, following a decrease of 0.1% in February 2023. On a seasonally adjusted basis house prices decreased by 0.9% in March 2023.
“This was not the news many homeowners, particularly those with plans to sell in the short term, will have been wanting to see. That said, the average house price in the UK increased by 4.1% in the 12 months to March 2023 so most owners will have seen their asset increase in value regardless.
“The spring and summer months typically bring more demand to the housing market and as such prices become more buoyant. Homeowners will be hoping that today’s lower inflation figure may spell the start of the end of the cost-of-living crisis, which will also help keep prices steady at the very least.
“The advent of new products like the 100% mortgage will also play their part in keeping more first-time buyers in the market. First-time buyers have been priced out as of recent, suffering with the dual problem of having to raise a large enough deposit and eye-watering interest rates. Now, with this new mortgage product, at least one of these problems is dealt with.
“With the economic path now looking a little more predictable house prices may remain stagnant, dropping marginally over the next few months before regaining momentum when the worst of the cost-of-living crisis is behind us.”
Conor Murphy, CEO and founder, Smartr365 and Capricorn Financial Consultancy:
“Market conditions remain extremely favourable as we head into the busier summer selling period. Swap rates and interest rates are competitive, product innovation is strong, and lenders remain keen to add to their loan books. First-time buyers will also be encouraged by this further correction to house prices.
“With all these positive factors in mind, many buyers will eyeing up a purchase and keen to get the ball rolling quickly. Mortgage technology offers a crucial helping hand here, streamlining processes which ultimately helps all parties. Offering the opportunity to kickstart your homebuying journey by simply scanning a QR Code demonstrates that you are offering a sleek and efficient service, something that it increasingly important as a new generation of tech-savvy buyers look to make their first purchases.”
Paul Glynn, CEO of Air:
“Recent economic forecasts reveal that interest rates on residential mortgages may now peak in September before starting to creep down as inflation eases. This suggests that current trends in house prices revealed by the latest ONS index are perhaps only a holding pattern, until these larger economic changes begin to take effect toward the end of the year.
“However, affordability is likely to remain a key challenge for buyers of all ages with younger borrowers unable to take their first steps on the ladder and some existing borrowers facing the challenge of being trapped on their lenders soaring standard variable rate. While later life borrowing is not a silver bullet and the impact of any choices need to be considered on a customers’ short as well as long-term finances, advisers seeking answers for their clients need to consider whether thinking outside the box may serve them well.
“Consumer Duty regulation will expect organisations to have referral relationships in place if they are unable to fulfil a customer’s needs themselves so now is the time to ensure these partnerships are in place.”
Vikki Jefferies, proposition director at PRIMIS:
“March’s data shows a modest yet encouraging recovery in house prices, as buyers adjust expectations to what is fast becoming the ‘new normal’ for mortgage rates, and lender appetite remains strong.
“Although affordability issues remain front and centre for both brokers and buyers, it’s great to see lenders innovating to offer more flexible affordability criteria and widen product ranges for a greater range of financial circumstances. Brokers who are keen to stay informed of industry developments should turn to networks to expand their product knowledge, enhancing their ability to deliver the best outcomes for a variety of unique and complex borrower needs.
“We would always advise buyers and remortgagers to seek professional advice to source the best possible deals, and the ever-evolving product landscape has made the role of the broker all the more invaluable. In order to navigate a mortgage market that remains prone to change, homebuyers continue to require expert guidance and support, and will benefit from the flexibility to switch onto more affordable rates that broker support can offer.”
Malcolm Webb, technical director at Legal & General Surveying Services:
“Today’s data suggests that confidence in the property market is slowly returning, albeit not quite to the highs of this time last year, but momentum is picking up once again as market activity remains in line with pre-pandemic levels. Strong product innovations, such as the release of Skipton Building Society’s new 100% LTV mortgage product, are providing more options to potential buyers, particularly those stuck in the rental cycle.
“We hope that the upcoming busy summer selling period will continue to defy the gloomy outlook predicted at the beginning of the year. However, with inflation and living costs where they are it’s critical not to skimp on a home survey as it is vital purchasers have as much insight as possible into the property they’re buying, and any potential additional costs they could be facing, before signing on the dotted line.”
Emma Hollingworth, managing director of mortgages at MPowered Mortgages:
“Despite house prices coming down from the record highs seen in 2022, the figures today should provide buyers with some confidence in that they remain well above pre-pandemic levels.
“Whilst the BoE’s decision in May to raise the base interest rate to 4.5%, along with recent market shocks such as the failure of Silicon Valley Bank, have led to some uncertainty in the mortgage market, a renewed stability in mortgage rates over the last few months is bringing buyers back into the market. Additionally, lenders and brokers are giving consumers every reason to be optimistic, as they work to understand customer needs, and offer rates that are as affordable as possible despite interest rate rises.
“At MPowered Mortgages, we are working on increasing the speed of the mortgage application process using AI-enabled solutions. This gives brokers more time to spend advising their clients, who in turn can have increased certainty and control to find a product that suits them at this time.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Inflation is moving in the right direction, although more slowly than we would want to see and it is unlikely to be enough to stave off another rate rise.
“Swap rates rose on the back of the inflation figures this morning and it is likely that more lenders will reprice their mortgages higher. We have already seen some volatility in pricing in recent days on the back of higher Swaps, which underpin the pricing of fixed-rate mortgages, with Santander and Halifax pulling rates. Other lenders are repricing upwards at short notice.
“Borrowers who are unsure as to whether to take a fixed-rate mortgage now or hold out in the hope of cheaper rates in the future should seek advice from a whole-of-market broker.”
Alex Lyle, director of Richmond estate agency Antony Roberts:
“Much depends on what type of property you are interested in buying in terms of what prices are doing – there is little differential in house prices compared to this time last year while flats are compromised and struggling to achieve the prices they could have done a year ago.
“Stock levels are up on this time last year and the majority of houses in the £1.5m-plus bracket are going under offer within three weeks of marketing. However, we have never known transactions take so long to progress from agreed to exchange as many solicitors find themselves at capacity.
“Demand from new buyers is down slightly year-on-year although over the past couple of months we have seen an uptick in enquiries as the weather improves and properties appear at their best.”
Matt Baldock, director of Chelmsford-based estate agents, Charles David Casson:
“Though the annual rate of house price growth fell in March compared to February, overall the sales market in 2023 to date has held up better than most predicted following the havoc wreaked by the mini-Budget.
“Buyers have now accepted current mortgage rates as the new norm, much like we all have with petrol prices. At first, you complain and stall but ultimately you adapt and there is always a real desire in this country to own a home.
“For the first time in a very long time, it’s about as even a market as you can get, namely neither a buyers’ nor a sellers’ market. It will eventually tip one way or the other but for now buyers don’t feel they are overpaying and sellers, while realising prices aren’t racing away anymore, are not underselling.
“The fact that inflation is now back in single digits could also boost property market sentiment, especially if it continues to fall. Overall, I see stability for the year, in house prices, mortgage rates and buyer demand, and after the past few years the market certainly needs a period of stability.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“This most comprehensive of all the housing market surveys confirms what we have seen elsewhere, even though these figures are a little dated.
“Prices are up a bit or down a bit with no significant changes expected over the next few months. Buyers and sellers are finally shrugging off the worst effects of last September’s mini-Budget, with the market in a better place than it was at the end of last year.
“Confidence is slowly returning, particularly as inflation is beginning to fall and expectations grow that interest rates are at or near their peak.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“House price growth is slower than it was a year ago, but still holding up much more robustly than many commentators foresaw.
“Confidence is returning as inflation falls and the economic outlook brightens, and this in turn is leading to increasing activity in the property market.
“Buyers have a lot more choice than they did during the frantic months in 2021 and 2022 thanks to strengthening stock levels.
“This makes for a much healthier market, and is encouraging buyers to begin their house search as they can see options appearing much more regularly.
“Importantly, mortgage rates haven’t moved too much since the latest increase in the base rate and this stability is helping the market put on a strong showing as we move towards the summer.”
Jonathan Hopper, CEO of Garrington Property Finders:
“The night is often coldest just before dawn, and this snapshot from March reveals a market still iced over by the post-Truss chill.
“March’s 1.2% drop in average property prices wasn’t just the fourth month-on-month fall in a row, it was also a sharper drop than those seen in the depths of winter.
“This latest decline has throttled back the annual pace of price growth across the board, but especially sharply in London – where the annual rate of inflation halved in the space of just a month.
“But falling or flatlining prices are piquing the interest of would-be buyers, and we’re starting to see a steady stream of buyers come out of the woodwork, fired up by settling mortgage rates and the sense that there are now some bargains to be had.
“We’re even seeing some first-time buyers, fed up with soaring rental costs, return to the market – and in many cases they are drawn to the former investment properties being offloaded by buy-to-let landlords for whom the sums no longer add up.
“Increasing levels of buyer interest are slowly pushing up the number completed sales, and in some cases leading sellers to get carried away on pricing. In many parts of the UK, this remains a buyer’s market and homes that are priced competitively are selling well; overly optimistic sellers risk seeing their home sit on the shelf as buyers feel they have both time and choice on their side.
“As this tension eases and the market finds its new equilibrium, prices are likely to meander in the second half of the year.
“While prices always hog the headlines, the most positive trend is in transaction volumes. The number of homes coming onto the market and being bought is creeping back up and the market is slowly becoming more free-flowing.
“The price reset has been hard but the market is rebooting.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“House prices are still holding steady despite the financial challenges faced by many households. This will be welcome news to sellers who might have expected worse news in the first half of the year.
“There has been a slight drop compared to last month, but as there are now more properties on the market than this time last year, we are seeing sellers being more flexible on the asking price.
“We saw today that inflation is finally coming down. This should help reassure prospective buyers that they will be able to afford their mortgage repayments and that confidence in the market will keep house prices robust.
“Getting inflation under control has come at the cost of higher interest rates, which in turn impacts on mortgage availability. If this improves, we may see more competitive offers being put on the table by lenders and this too will get more people on the property ladder.
“If you are considering selling your home, now is a good time to contact your local estate agent and ask about market conditions in your area. Rental prices are sky-high, which means first-time buyers are still better off owning their home if they can afford to.”
Tomer Aboody, director of property lender MT Finance:
“As transaction levels reduce, which is what has happened over the past year on the back of lower confidence levels fuelled by rising costs and interest rates, property prices will rise.
“We are slowly seeing signs of potential stability in rates and some reduction in inflation as promised by Sunak, which should come to a head towards the end of the year. This will improve confidence in the market and hopefully increase transaction levels, which should keep prices in check.”
