The average UK house price increased by 0.2% in the 12 months to August 2023, down from 0.7% in July 2023, according to the Office for National Statistics (ONS).
The average house price was £291,000 in August 2023, little changed from 12 months ago, but £9,000 above the recent low point in March 2023.
Average house prices over the 12 months to August 2023 held firm in England at £310,000, decreased in Wales to £217,000 (a -0.1% drop) and increased in Scotland to £194,000 (1.1%).
In addition, average house prices increased by 2.7% to £174,000 from April to June 2023 in Northern Ireland.
The North East saw the highest annual percentage change of all English regions in the 12 months to August 2023 (3.6%), while the East of England saw the lowest (negative 1.6%).
Reaction:
Tony Hall, head of business development, Saffron for Intermediaries:
“Although the market has become accustomed to persistent house price growth, this recent softening is not cause for concern.
“Swap rates and interest rates remain broadly stable, which should help to coax demand and in turn reinforce the value of housing stock.
“There have also been suggestions that the Bank of England will again announce it is maintaining the base rate when it next meets on 2nd November, which would be a further and significant sign of confidence in the market.
“The UK economy has also returned to growth, albeit marginal, after a worse-than-expected July.
“Lenders remain keen to add to their loan books, and with swap rates remaining relatively stable, many products are actually being priced downwards.
“At Saffron, we have just announced that we have increased the maximum loan size on residential and Self-Build Large Loan products, and revamped the range with lower rates.
“I remain confident that reports of a huge market crash are overblown. The mortgage market might be in choppier waters than we have become used to, but that is no reason to believe that it is about to sink.”
Paul Glynn, CEO at Air:
“While we are seeing house price growth flatten out, we have also seen a number of mainstream lenders recently reduce their mortgage rates as they price in future base rate rises, and this will ultimately have a positive impact on buyers’ sentiment.
“What this shows is that the property market continues to be resilient despite growth slowing compared to the usual October uplift.
“As borrowers navigate the complexity of the market, it is important that advisers support their customers with a range of solutions to meet their individual financial needs.
“With this in mind, access to effective sourcing systems and affordability tools will be crucial for advisers to achieve the best possible outcomes for their clients.”
Conor Murphy, CEO and Founder, Smartr365 and Capricorn Financial Consultancy:
“Stabilising swap rates and the Bank of England pausing its rate-rising cycle have both instilled confidence in the UK property market.
“Lenders are increasingly competing on pricing to win new business as a result, amidst subdued demand.
“While valuations in the wider UK market are less robust, the prime central London property market has done particularly well to defy these broader economic headwinds, initially created by the Covid-19 pandemic, war in Europe, and disruption to global supply chains that followed.
“In consequence, Savills predicts that prime central London prices will rise by a significant 13.5% by the end of 2027.
“There is huge regional variation in the UK market and that’s why it is so important to consult a qualified, experienced broker when looking to purchase a property, as your outlook will differ drastically depending on the area, property type, and mortgage you are searching for.
“Nonetheless, today’s higher rate environment coupled with the cost-of-living crisis will continue to shape buyer behaviour, and brokers should strengthen their own mortgage tech offering to ensure they can quickly and efficiently adapt to the changing trends.
“An increase in mortgage defaults in Q3 has highlighted the importance of protection, and brokers should also consider adopting a platform that can cater for both mortgage and protection needs in one sleek and holistic support package.”
Nick Leeming, chairman of Jackson-Stops:
“The continued resilience of the UK housing market should not be underestimated.
“While house price growth may have subdued – perhaps the expected outcome in response to more challenging lending conditions – the market is taking a ‘Keep Calm and Carry on’ approach to housing.
“Across our national network, we are seeing new instructions rise as committed sellers remain eager to make their move – a level on a par with the same time a year ago.
“This sentiment is reinforced by the volume of instructions increasing up and down the country, up 72% since January.
“In some areas of the country, the Autumn market is experiencing a late Summer sizzle, with Sherborne, Norwich and Blandford coming out as top performing locations for the Jackson-Stops network with the biggest increases in buyers vs sellers month on month.
“Irrespective of short term uncertainty and economic headwinds, the fundamentals of the property remain the same.
“Buying a home or taking out a mortgage are some of the most significant and long-term financial decisions a person will make, and while there are always periods that are more favourable financially, changes to lifestyle will inevitably continue to contribute to transactions completing.
“More broadly, homeowners have been paying close attention to the recent party conferences, hoping to compare the major parties housing policies ahead of the next general election, which could be as soon as next spring.
“Whilst the run up to an election year can breed more uncertainty, we are yet to see this in a big way.
“If positioned correctly, it is hoped that any new housing policies serve to stimulate markets and broader economic confidence, supporting transactions and housing mobility across the UK.”
Richard Harrison, head of mortgages at Atom bank:
“Prices continue to rise more slowly, with today’s data reflecting the challenging time the property market has experienced so far in 2023, with rising rates negatively impacting how much buyers are able to borrow as well as customer confidence.
“As a result, activity in the market has remained subdued and the latest Bank of England approval figures point to a marked reduction in purchase activity, with August’s numbers some 37% lower than the same period last year.
“This is particularly true in the South of England, which has seen house prices fall as people face ongoing affordability challenges.
“However, there is some cause for cautious optimism. Softening prices present an opportunity for first-time buyers, and many experts now think that Base Rate has reached its peak, with headline mortgage pricing falling over the last 12 weeks.
“This is unlikely to stimulate an immediate dramatic bounce in activity and prices, but it does reduce the potential of a more pronounced reduction in prices as had previously been speculated by some commentators.”
Vikki Jefferies, proposition director at PRIMIS:
“August is a notoriously quiet month, and it is likely that today’s figures have been impacted by a seasonal drop in demand on top of the longer-term trends.
“Furthermore, lenders reducing their rates in recent months is having a positive impact on consumer sentiment and should start to ease some of the price sensitivity we have seen from buyers.
“However, given comments this week from the Deputy Governor of the Bank of England that relatively higher interest rates are here for the foreseeable future, it is important for brokers to establish how they can best support customers in a higher interest rate environment.
“This means emphasising the importance of income protection and having conversations with their customers as early as possible to understand their individual needs and find the most appropriate product for them.
“Mortgage networks’ training and workshops can provide invaluable support for brokers in managing customer and lender relations at this time.”
