Annual house price growth has slowed to 1.1 per cent - a sharp drop on a month ago when it was 2.8 per cent.
The Nationwide says the average house price is £258,297. This is down from £262,068 in December and well below August’s peak of £273,751.
London continues to have the highest house price to earnings ratio at 9.2. Scotland and the North region have the lowest house price to earnings ratios at 3.4.
These figures follow Bank of England data earlier this week showing mortgage approvals continuing to dip.
Helen Morrissey, analyst at business consultancy Hargreaves Lansdown, says:
“The heady days of the pandemic race for space feel like a lifetime away and it won’t be long until we see house price growth going backwards.
“…There are signs mortgage rates are starting to come down but it’s going to take a lot to tempt people back into the market and Bank of England data published yesterday showed mortgage approvals continuing to fall.
“Looking ahead it’s hard to see anything changing for the better any time soon. Budgets are still squeezed putting a brake on people trying to save a deposit that already takes years to build.
“The data shows someone in London wanting to save a 20 per cent deposit could be saving for 15 years or more. Predictions of house price falls this year will also prompt would-be buyers and sellers to hold off on a purchase until the outlook looks a bit clearer.”
Tom Bill, head of UK residential research at Knight Frank, adds: “The UK housing market is headed for an annual fall in prices as mortgage rates remain notably higher than 12 months ago. To anticipate how steep, you need to look beyond the short-term distortion of the mini-Budget.
“For example, buyers and sellers switched off early for Christmas but activity bounced back in January. The resilience of prices and sales volumes will be put to the test in the spring when larger numbers of transactions take place and by which time virtually no five-year fixed-rate mortgages below four per cent will remain in circulation.
“We expect prices to decline 10 per cent over the next two years as budgets get recalculated.”
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Let’s all panic and sell up
That’s what they want …
I’m not panicked, but I am still selling.
George, no surprise taxed to the eye balls, it would be great to get out but not allowed that’s blocked as well.
So High interest rates, super taxation and no Section 21, that should do the trick, if not an Insurance guarantee Policy in the shape of HMO Licensing is sure to kill it.
What’s this higher earnings in London 9.2% as apposed to 3.4% in the North you are having a laugh, surely those figures should be reversed.
The price of property is approximately 3 times more in London so shall we say 3.4% x 3 = 10.2% for North for same outlay and they haven’t had the punitive regulation yet to the same degree.
I stopped reading when I saw it was the 'expert' from Hargreaves
Realistically house prices need to fall, or at least rises need to level off. Prices will always rise to what people can afford to pay whilst there is more demand than supply (ie fewer houses than households across all markets). Prices have risen over recent years to take up the low interest rates and longer terms now available on mortgages). If mortgage rates are now at a more realistic level, and likely to stay roughly there, earnings need to catch up with the new house buying costs, which will take time, before prices start to rise again. This seems obvious to me.
It may mean our capital gains are not as big as they would have been but the PRS is only part of the wider property sector
Maybe another reason to sell now rather than hanging on for more capital value increases??
Emily, agree with your analysis with the exception that I think when interest rates stabilise and inflation falls then buyers will return to the market. This will strengthen house prices, though not to have the madness of early last year until end of the Summer.
Therefore, as I intend to sell I won't be bringing anything to the market now until September ish.
I guess time will tell if my instincts are right!!
Wages and earnings need to rise to cover inflation, and they will, the worrying thing is however inflation is not at 11% as we are being told, TRUE inflation is much higher than that, an example the pellets for my bio mass boiler have doubled in cost, so have building materials and many other products .
You are right the figures they give for inflation are only based on certain items in their calculations. All depends what you are buying. If you have to get your roof repaired then you have to pay whatever it costs. For general groceries you can choose budget options. If you have to pay a mortgage, it's just gone up by more than 100%. Hey ho.
Increasing interest rates don’t control inflation, it cause it.
Why else has the price of everything rocketing, directly because of hiking interest rates several times if they hadn’t done this, our situation wouldn’t be nearly as bad and the Market would find there own level.
Emily. We can’t refer to the Housing Market without including PRS which is an integral part of all Housing Stock.
That’s the problem now when landlords stops buying or in this case forced to stop, the
Market falters as is now the case.
When a Residential owner wants to sell whether to up or down size, it’s very often the landlords is his saving grace. Sometimes they need a lot of work and first time buyers haven’t the finance or are not up to it or most likely wouldn’t get the Mortgage on a property that needs work.
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