House prices increased on a quarterly basis for the first time since Q3 of last year, but the annual rate of growth has slowed to 0.4%, Benham and Reeves has revealed.
As part of its latest Property Market Index Review for Q2 of this year, Benham and Reeves found that the average price sat at £307,191 for the second quarter of 2023.
This marked a 1% increase on Q1 2023, and the first quarterly increase since Q3 2022.
Benham and Reeves suggested that market decline that came in the wake of last September’s mini-Budget may now have passed.
House prices also remained 0.4% higher on an annual basis, but this annual rate of growth is the weakest on record since Benham and Reeves established the index in 2018.
In London, the average house price was £572,230, up by 0.8% on the quarter.
As with the national picture, this was the first price increase since Q3 2022 after consecutive quarterly declines of -0.7% and -1.8%.
Despite this quarterly recovery, London prices decreased by -1.1% on an annual basis. This is the first yearly drop in London since Q4 2019.
In Q2 2023, the market gap between the mortgage approved price of a buyer (£273,431) and the asking price expectations of a seller (£370,651) increased to 35.6% across the UK.
This was 1.5% higher than the previous quarter, and the largest gap seen since Q3 2020.
In London, the gap between buyer (£516,923) and seller (£686,271) was 32.8%. This was 0.4% higher than last quarter, and the largest gap seen since Q1, 2020.
Upon analysing the gap between the average asking price and the average sold price, the mismatch between seller expectation and the reality of current market conditions became clear.
Across the UK, the average sold price of £286,032 was 22.8% below the average asking price of £370,651. This gap increased quarterly since Q3 2022, and was 1.4% wider than the last quarter alone.
In London, the gap between asking price and sold price was -23%, having also increased steadily since Q3 2022.
Marc von Grundherr, director of Benham and Reeves, said: “It seems we have a market of cautious buyers coming up against optimistic sellers, and the gap in their expectations is widening.
“But it’s by no means unusual for sellers to want more than buyers are willing to give, particularly given the fact we’re yet to see any meaningful decline in market health.
“So, none of this is unexpected, especially while the cost of living and borrowing is so high.”
He added: “With interest rates climbing, buyers will continue to demonstrate a reluctance to overstretch and, as a result, the gap between seller expectation and market reality is likely to widen further.
“However, the house price crash predicted by many experts following the disastrous mini-Budget simply hasn’t materialised and we expect the market to stand firm over the mid to long-term.”
