The slowdown in house prices that followed last September’s disastrous mini-Budget has been laid bare by the latest UK House Price Index from the ONS and Land Registry, with this morning's figures showing that annual house prices growth fell to 6.3% in January this year, down from 9.3% in December 2022.
According to ONS data, average house prices increased over the 12 months to 6.9% in England, 5.8% in Wales, 10.2% in Northern Ireland, and 1.0% in Scotland where annual house price inflation has been slowing since the recent peak of 13.8% in the 12 months to April 2022.
On a regional level, the North East saw the highest annual percentage change of all English regions in the 12 months to January at 10.0%, while London saw the lowest at 3.2%.
On a seasonally adjusted basis, average UK house prices decreased by 0.6% in January, following a decrease of 0.4% in December 2022. When non-seasonally adjusted, prices were down by 1.1%, following a decrease of 0.5% in December.
Nathan Emerson, Propertymark Chief Executive, comments: "The ONS’s latest data reflects on deals agreed around the time of the disastrous mini-budget and more up-to-date data coming from the market and the wider economy paints a more positive picture.
“In January, our member estate agents reported that the market had picked up pace with sales agreed up 50 per cent from December. Serious buyers are still very much in the market and with more homes are coming up for sale, competition is considerably lower. Therefore, prices are returning back to far more sustainable levels than seen previously.”
Tom Bill, head of UK residential research at Knight Frank, said: “January’s drop in annual house price growth tells us a lot about the detrimental impact of the mini-Budget but very little about how the UK property market will perform this year. After effectively switching off for the final quarter of 2022, demand and supply have been solid this year and sales volumes will eventually catch up against an economic backdrop that is proving stronger than expected.
"This won’t be the last mismatch between weak historical data and the stronger present-day reality. A recession has been revised away and inflation forecasts have been lowered, although we think prices will come under pressure as more owners move onto higher mortgage rates and supply builds from the lows of the pandemic.”
Sarah Tonkinson, Managing Director of Institutional PRS and Build to Rent at Foxtons, said: “With 20 renters registering per new property on the market, right across London, we are in the midst of an unbelievably competitive first quarter. Budgets have increased in every region, and average rent has, once again, broken records.
"However, despite the low rental supply in London, there was an interesting increase in new listings in the boroughs of Westminster and Tower Hamlets. Sudden opportunities like this will crop up across London through the year, and our local experts work with renters to get them matched and into their new homes at pace in this fast-moving market.”
Iain McKenzie, CEO of The Guild of Property Professionals, says: “The gradual readjustment in house prices continued in January, despite year-on-year levels still showing growth.
“The average home still costs almost £60,000 more than pre-pandemic levels, and there will be many first-time buyers who have been saving since before then that will be hoping prices fall further still.
“Homeowners shouldn’t worry though, as the slowdown in prices is moving at such a glacial pace that homes are unlikely to lose significant value.
"House prices have always been influenced by affordability, and with inflation making a surprise jump today, it is clear that this needs to be brought under control before confidence can be restored in the market.”
Nick Leeming, Chairman of Jackson-Stops, comments: “Despite economic headwinds, the property market remains on course for the months ahead, with only a marginal decrease in house prices reported despite many predicting a more dramatic decline.
"Much of this data reflects the fallout from Autumn's Trussonomics, where now, as we move into the Spring, we are seeing a much more healthy market with more listings as well as buyers, as people renew their search after putting purchases on hold for longer than usual at the end of last year. Resilience is the new buzzword for housing, with what could be a surprisingly bright summer ahead.
“Sellers have benefited from unprecedented levels of house price growth in recent years and even as this pace softens, low housing stock and stabilising mortgage rates are likely to insulate prices for the foreseeable future.
"On an annual basis, average UK house prices increased by 6.3%, with the average price now £290,000. Even as price growth adjusts slightly month on month, house prices are still £17,000 more than they were a year ago. This was demonstrated further in Rightmove’s latest survey, seeing house guide prices rise by £3,000 – seemingly defying economic gravity but a solid indicator of a resilient market.
“There remain opportunities available and deals to be had for buyers in a position to move quickly. Micro-housing markets continue to see regional nuances in buyer demand and stock availability, but one thing that is clear across Jackson-Stops’ national network is that properties in prime locations with high-quality, local amenities are continuing to command a premium. Urban locations and commuter towns that allow buyers to have more space and a manageable commute remain property market gold dust.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "A slowdown seemed inevitable after house prices rose so far and so fast, but was accelerated by last September’s mini-Budget. The impact of this is still to fully play out.
"Although reflecting what was happening a few months ago, this most comprehensive of all property market surveys broadly confirms what we’ve been seeing in our offices recently. The reasons for moving haven’t disappeared as buyers are slowly returning encouraged by falling mortgage rates.
"Although viewings are up, sales conversions are harder due to more choice and increased buyer caution."