Annual house price growth has remained unchanged for the third consecutive month, according to the latest data from Halifax Mortgages.
The annual rate of house price growth remains at +2.1% for February, with the typical property now costing £285,476, compared to £282,360 last month.
While there was a 1.1% increase in house prices through the month of February compared to January, overall prices have been flat for the last three months.
The rate of annual growth slowed in all nations and regions during February, with the most significant reduction seen in the North East at 1.1% in February, compared to a rise of 3.6% in January.
In London, average house prices fell by 0.9% from January to £526,842, with flats experiencing a stagnation in prices. However, homes in London still cost over £240,000 more than the UK national average.
According to Kim Kinnaird, director of Halifax Mortgages, recent reductions in mortgage rates, improving consumer confidence, and resilience in the labour market are helping to stabilise prices following the falls seen in November and December.
Nevertheless, with the cost of a home down on a quarterly basis, the underlying activity indicates a general downward trend.
By property type, prices of flats have fallen by 0.3% over the past 12 months, while prices for terraced properties have broadly stagnated with a 0.3% rise.
Detached properties have seen a 1.5% increase, the lowest rise since the end of 2019. Annual price inflation remains stronger for new houses, with a 6.6% increase, than for existing properties, which saw an unchanged 1.1% rise, the lowest in nearly a decade.
With the average house prices remaining high, housing affordability will continue to feel challenging for many buyers, according to Kinnaird.
Despite the quarterly decline, homes are still almost £9,000 above the average prices seen at the start of 2022 and above pre-pandemic levels, meaning most sellers will retain price gains made during the pandemic.
Reaction
Nathan Emerson, chief executive of Propertymark:
“Year on year, estate agents across the UK have seen a small drop in the number of sales being agreed whilst the number of new properties coming to market has remained the same.
“Increases to interest rates have caused buyers to rethink their budget and haggle on price, but the drive evidently still remains to see their purchase through and move home.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Annual price growth remains consistent as the market gradually returns to something closer to what we were used to pre-pandemic.
“Lenders continue to jockey for position with a number increasing the pricing of their cheapest 5-year fixes. However, even if there is another base rate rise this month, there is a growing expectation that rates are close to their peak, and if inflation also continues to fall, the outlook appears brighter for borrowers.”
Avinav Nigam, cofounder of real estate investment platform, IMMO:
“As house prices remain largely unchanged compared to the end of last year, while interest rates continue to rise, there seems to be little relief in sight for prospective buyers, and even less for renters already squeezed by an affordability crisis and decreasing supply of rental housing.
“While the private rented sector shrinks in what some are calling a ‘landlord exodus’, and local governments debate ideas around rent freezes or controls, it is ever clearer that the UK desperately requires significantly more professionally-managed rental housing operators providing safe, affordable housing to a growing population of renters.”
CEO of Alliance Fund, Iain Crawford:
“House prices appear to have stabilised at a far quicker pace than anticipated, following the string of significant downward monthly corrections caused by the turbulence of last September’s mini-Budget.
“This suggests that the nation’s homebuyers and sellers are coming to terms with the new normal of higher interest rates and are continuing to transact at this new middle ground, having adjusted their position in the market accordingly.
“However, we’re certainly not out of the woods yet and while the current outlook is a more positive one, the wider economic landscape and the current cost of living crisis will continue to have an influence.
“As a result, we can expect a slower market in comparison to previous years, although the potential for any significant correction to house prices is looking increasingly less likely as the days go by.”
Jason Ferrando, CEO of easyMoney:
“The property market has put in a fairly resilient display so far this year and we’re yet to see house prices plummet, putting previous predictions of a market crash to bed for the time being.
“However, a shot in the arm in some shape or form isn’t out of the question and the government may choose to deliver this by incentivising buyers via the spring statement at the end of the month.
“As it stands, there doesn’t seem to be any direct focus on housing on the agenda, but a curve ball certainly isn’t out of the question and boosting market health by fuelling demand is a hand we’ve seen the government play on countless occasions.”
Director of Benham and Reeves, Marc von Grundherr:
“Although previous reports of housing market health have been less than positive, those of us on the ground are privy to changes in market sentiment far sooner than the reporting of topline statistics allows.
“While current house price performance may remain sluggish when compared to the meteoric rates of the pandemic market boom, there’s been a notable uptick in activity in 2023 and this has reversed the rot seen during the back end of last year.
“Yes, we expect the market to move forward at a more measured pace over the year ahead, but what we simply aren’t seeing is an exodus of buyers forcing sellers to dramatically reduce prices, bringing the market to its knees in the process.”
Managing director of Barrows and Forrester, James Forrester:
“The housing market continues to stand firm in 2023 and the general economic outlook is far more positive than anticipated. So we can expect that the property market itself will be largely overlooked in this month’s spring statement, particularly given the fact that house prices have stabilised in recent months. “
James Briggs, head of personal finance intermediary sales at Together:
“After January’s house prices held, prices rose from 0.2% to 1.3% in February
“However, with house prices falling elsewhere around the world, the outlook for the UK market hangs on what happens next with inflation and interest rates. First-time buyers may continue to act with caution until the picture is clearer, delaying purchasing decisions until later this year – causing activity to slow.
“All eyes will be on the Spring Budget later this month, with hopes for a concrete plan to support hopeful buyers and existing borrowers. In the meantime, specialist brokers and mortgage lenders are in the best and most flexible position to assess your personal and financial circumstances and assist homeownership ambitions.”
“That said, any help afforded to households to help combat the cost of living crisis should have a spillover effect, boosting market sentiment and ensuring that any notable market downturn is avoided.”
Jeremy Leaf, north London estate and a former RICS residential chairman:
“What we are seeing at the sharp end is confirmed in these well-respected figures.
“The reduction in housing market activity has been quite modest considering recent rises in mortgage rates and the cost-of-living shock, while a fresh crop of properties has buoyed viewings considerably and is outstripping sales agreed.
“As a result buyers are waiting to see if prices may soften further and mortgage repayments stabilise before committing.”
Gareth Lewis, commercial director of property lender MT Finance:
“These figures suggest that nothing too drastic is happening in the market in terms of distressed sales.
“Swaps, which determine the pricing of fixed-rate mortgages, have risen these past few weeks on the back of nervousness around the Budget and the Bank of England suggesting that base rate may have higher to go.
“That said, it’s still relatively business as usual with sub-4% fixed rates available for the right borrower at the right loan-to-value. Lenders are trying to lend money; their credit risk appetite has changed but not to the extent that they don’t want to lend.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“House prices continue to defy the gloomy forecasts that we were seeing a few months ago and are remaining buoyant for the time being.
“In fact, February even saw a slight increase compared to last month, while annual prices show a cooling effect in the market.
“While some buyers may be hoping for a more dramatic readjustment in house prices, it means that you won’t find yourself in a position where the value of your property falls as soon as you sign on the dotted line.
“Homeowners who are looking at selling this year have been worried that they may have to sit tight, but the figures suggest that many may still get the asking price they were hoping for.
“The story isn’t over yet though and we will likely see some further readjustment in prices throughout the year, as pressure from living costs squeeze household budgets.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“Average house prices in February were broadly stable, recording a small annual increase — just what is needed to inspire confidence in sellers that now is the time to list their properties, and also entice buyers who want to benefit from a good deal on their next home.
“We’re entering a critical period, as March could determine whether the property market benefits from a big bump in activity over the usually busy springtime.
“What the property market needs now is confidence, and we can expect that to grow if we survive the Government Budget next week without any of Jeremy Hunt’s announcements reinflating mortgage rates.
“However, with another Bank of England interest rate decision due this month, buyers may be holding their breath long into March.
“If we get through both events with very little movement in the mortgage market, or even an improvement in rates, then we’re in a good place for the market to kick into the next gear just as spring gets properly underway.”
Will Rice, CEO of residential mortgage lender, Generation Home:
“We expect house prices to stabilise throughout 2023. The majority of the correction has already happened, and while there may be a little room left to fall, it won’t be much. Inflation will be the key driver of the housing market in the near future. It will determine what the Bank of England decides to do with the base rate, which will directly pass through to mortgage rates and housing costs, which in turn will affect the level of demand from buyers, determining house prices. If you’re in the financial position to be able to buy, now could be a good time to be in the market. If prices do stabilise throughout the year, we might see demand increasing and more properties listed, creating competition between buyers.”
Louis Mason, director of London-based mortgage broker, Oportfolio:
“Demand for property was surprisingly strong in February, specifically from first-time buyers, supported by the fact that many sellers are being more realistic with their asking prices and the jobs market is holding up. Lower prices are stimulating demand and reigniting the market. The Bank of England base rate possibly being near its peak and inflation starting to nudge down have definitely given buyers more confidence. People are realising that things are going to get better and a degree of normality is returning to the industry, day by day.”
Nick Harris, co-founder at Wokingham-based Quarters Residential Estate Agents:
“Demand for property was far higher in February than January. There’s more confidence out there than many think. This shows that while discretionary buyers are sitting tight, the serious buyers remain active. Sellers are being much more realistic on price, and are typically also buyers so they appreciate a more balanced property market. Locally, we don’t expect to see the often reported ‘crash’ but can certainly see that a correction of circa 5% is realistic. It’s no secret the market is currently favouring buyers. On a positive note, people are no longer panic buying property. A base rate reduction later this year, once inflation is under control, would certainly stimulate demand and while it’s doubtful that prices will start to rise again, transactions should increase.”
Rohit Kohli, operations director at Romsey-based mortgage broker, The Mortgage Stop:
“People were overpaying for properties for much of 2021 and 2022, with offers well above the asking price, so it’s no surprise prices have come down. They had to as the growth we had was simply unsustainable. Though last year’s mini-Budget was a pivotal moment, the higher cost of living, higher interest rates and general uncertainty surrounding the economy meant confidence among buyers was bound to fall. The buy-to-let sector has been the worst hit. Confidence has been knocked out of landlords and they are selling up at scale as higher mortgage rates and lower affordability from lenders mean their numbers are no longer stacking up. On March 15th, the Chancellor has an opportunity to take action to rebuild consumer confidence, invest wisely and lift expectations. Whether he does that is another question.”
Kundan Bhaduri, director of London-based property developer and portfolio landlord, The Kushman Group:
“Right now is possibly the best buying opportunity in the UK property market we have seen since 2008 and the Global Financial Crisis. The depressed sales market is particularly favouring professional portfolio landlords, who are active and buying properties at a significant discount compared to prices this time last year. Transactions overall look set to plateau until summer and rise in the second half of the year, on account of strong demand led by lower interest rates and greater market confidence.”
Luke Thompson, mortgage adviser at King’s Lynn-based PAB Wealth Management:
“The recent asking price reductions and house price drops we’ve seen have mainly been fuelled by weaker demand in the market. There are very few instances currently of customers getting involved in bidding wars. The balance of power has shifted to buyers, who are now much more in control of the process than they have been in the previous 18 months. I think the biggest influence on house prices during 2023 will be inflation and the base rate. If inflation begins to fall, the base rate stabilises and potentially begins to drop towards the end of the year, borrowing will become more affordable, which will help to drive house prices upwards again.”
Marie Johnstone, managing director at Edinburgh-based estate agents, Wilson Property Group:
“February was a far busier month than January. We operate primarily in the off-market space in Edinburgh and Lothians and completed £3.3m of property sales in February. Whilst I know many estate agents will report lower than average sales prices, we have not experienced this at all with our average home still achieving 12% above the home report. Edinburgh has always been a very buoyant market and while it is natural for us to predict a downturn at some point, overall I see no changes so far. At the moment in Edinburgh we have been significantly impacted by the new short-term lets rules, resulting in an abundance of flats coming to the market. As a result, we will see a significant price decrease in flats and apartments in the city.”
Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial:
“The property market is stagnant at best, rotting at worst. Confidence has been knocked out of the market by a series of unnecessary rate hikes by the central banks and an inept Government piling more pressure on households by increasing taxes and withdrawing support for energy bills. It’s no wonder house prices are on the slide, and expect a further 10% decline this Spring before the Bank of England realises what a pickle we are all in and starts to slash rates in late summer. We’ve got a Budget just over a week away and the best way to stop the rot in the housing market is to stimulate the economy in general. He’s uncovered an extra £56bn, so let’s see if he uses it wisely. Maybe on building some new homes, as we are at a 75-year low. Or will he keep taxes high and snuff out any possibility of growth?”
Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com:
“House prices are directly correlated to mortgage rates. There’s no getting around that fundamental fact and I don’t believe the Bank of England will return to near-zero base rates anytime soon. The new norm for mortgage rates is probably around 4%, so I expect house prices to continue their steady decline for the next 12-18 months, possibly falling as much as 20%-25%, before levelling off.”
Riz Malik, director of Southend-on-Sea-based R3 Mortgages:
“Buyers in the UK property market are like thrill-seekers on a rollercoaster, with stomach-churning doubts creeping in as they approach the end of the ride. No one wants to be left holding the bag if the market takes a nosedive between application and completion. And let’s be real, buyers involved in chains is like a nerve-wracking game of dominoes. Will the deal hold up or come crashing down? It’s a real-life drama that would make Hitchcock proud.”
Jonathan Burridge, founding adviser at hybrid mortgage adviser, We Are Money:
“With several million mortgages ending their special rate this year and people facing considerable rises in costs, much will depend upon interest rates and the cost of living. If we see a significant rise in financial distress for mortgage borrowers, that could see the market stall as people won’t be buying. There is unlikely to be a flood of possessed properties hitting the market, certainly not this year, and there remains the stark fact that we have 880 properties per 1000 households. These factors will prevent any long-term house price depression. We may well see some fall in average property values, but it will not last long. Of course, we must remember that all forecasts are either wrong or lucky.”
Austyn Johnson, founder at Colchester-based Mortgages for Actors:
“Residential mortgage enquiries went through the roof for us in February. We have had a huge amount of enquiries overall, with buy-to-let the only subdued area of the market. Usually, in property, demand for buy-to-let will be much more common due to each client wanting more than one, but it’s good to see that our first-time buyer clients are looking to buy a home. Hopefully, the solicitors will not let them down so they can all complete.”
Charlie Lamdin, property expert at Moving Home With Charlie:
“Everyone is underestimating how many downward pressures there are on house prices, and how long they will remain in place. Even if there is the occasional month of ‘stabilisation’, we are at the beginning of a long downward trend in average house prices. Land Registry figures only include around 40% of transactions so they are not an accurate measure, and are subject to revision for up to 13 months. Prices will not bottom out until 2024 at the earliest. There is very little transparency on what is happening at the coal face of transactions, but we know that transaction numbers are around 15% down on their pre-Covid 5-year average. It’s not a lack of demand that’s the problem, as there is still plenty of interest and desire for property. It’s a lack of available finance to pay last year’s prices, which is what sellers are holding out for.”
Ross McMillan, owner at Glasgow-based Blue Fish Mortgage Solutions:
“The Scottish market is showing surprising signs of resilience in 2023 so far. Prices appear stable as the battle between supply and demand continues and the rabid desperation of agents for new stock shows that an imbalance remains. Demand from residential buyers remains robust but, with increased uncertainty on several fronts, buy-to-let investors are mostly dormant. Home Report valuations are finally now appearing to more accurately reflect current market conditions, with sellers showing signs of more willingness to accept offers around this. Subsequently, first-time buyer activity is beginning to sparkle again now that greater confidence exists. People are able to secure their first home without having to sell a kidney or empty their parent’s savings accounts.”
Justin Moy, founder at Chelmsford-based mortgage broker, EHF Mortgages:
“It’s hard to gauge the market as some of the property purchases currently taking place are still on the old rates from last summer. There has been an upturn in properties available for sale in our local area, so activity is better due to increased supply. Many are those properties being offloaded by ‘accidental landlords’, typically 2-3 bedroom properties evident by the ‘no-onward chain’ moniker. The prohibitive cost of renting locally is still making property ownership attractive, and first-time buyers will be attracted to these properties hitting the local market. Landlords have made their money over the past 7-8 years, and if sold at the right prices, they will in turn feed the local first-time buyer market. Very interesting sub-market, almost an orchestrated plan if you didn’t know better.”
