It’s Grim Down South - capital appreciation tumbles...

New data from Zoopla this morning makes grim reading for landlords, especially those reliant on capital appreciation and with investment properties in the south of England.

In London, house prices fell 1.0 per cent in a year; they were also down in the South East, South West, and Eastern England.

In Scotland they were up 1.7 per cent, the North West up 1.2 per cent and Yorkshire and The Humber up 0.9 per cent. Across the North, Scotland and Wales, it’s now cheaper to buy than rent in terms of monthly outgoings, while across southern England and the Midlands its cheaper to rent than buy.

Annual house price inflation has fallen to 0.1 per cent - the lowest, says Zoopla, since 2012.

Meanwhile the portal estimates that there will be just 1m sales completions this year, some 21 per cent below 2022 and the lowest for over a decade. Looking at the past four weeks in isolation, Zoopla says demand for homes is running 34 per cent lower than the five year average, and sales agreed are 20 per cent lower than the norm.

Sarah Coles, head of personal finance at Hargreaves Lansdown, says: “It’s decidedly grim down south, as a North/South house price divide leaves southerners struggling.

“This owes a huge amount to house prices and mortgage rates. In the south, prices tend to be higher, and mortgages larger, so higher mortgage rates have taken a bigger toll on affordability. More people are priced out of the market, so demand has fallen, and house prices have dropped.

“Given that first time buyers make up a third of buyers, the relative affordability compared to rentals is also key.

But she urges landlords and owner occupiers not to overstate the case because the property market isn’t booming in the north either - it’s just marginally less depressing than elsewhere. Across the UK, demand is down a third from the five-year average, and sales in 2023 are expected to be around one million – their lowest for more than a decade.

Coles says: “For more positive news, we’ll need to wait for significant movements in the mortgage market. As wages rise relative to property prices, we know that once mortgage rates go low enough, we should see affordability to start to work its magic on the market again.

“The problem is that predicting exactly how low rates need to go, and when they’ll get there is a tricky business. Zoopla is holding out hope for a tipping point in the first half of the year, but there are no guarantees.”

Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions.
If any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals, then the post may be deleted and the individual immediately banned from posting in future.
Please help us by reporting comments you consider to be unduly offensive so we can review and take action if necessary. Thank you.