The average price of a residential property in the UK was £286,000 in April 2023, up from £285,000 a month earlier.
The latest house price data from HM Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland showed a price growth of 3.5% in the 12 months to April, down from 4.1% in March 2023.
The Office for National Statistics (ONS), in its UK House Price Index report, noted that while April’s average house price was £9,000 higher than what it was 12 months ago, it was still £7,000 below the recent peak in September 2022.
Average house prices increased over the 12 months by 3.7% to £306,000 in England, by 2% to £213,000 in Wales and to £187,000 in Scotland, and by 5% to £172,000 in Northern Ireland.
Among the English regions, the North East saw the highest annual percentage change over the year to April at 5.5%, while London recorded the lowest rise at 2.4%.
“Annual house price inflation slowed again in April across most UK nations and regions,” commented Aimee North, ONS head of housing market indices. “The North East showed the highest annual growth, while London remains the slowest growing English region.”
Nicky Stevenson, managing director at Fine & Country, said: “The housing market has been incredibly resilient, but mortgage rate pressures are putting a damper on price growth.
“Despite this, the market remains strong, with buyers benefiting from rising stock levels and incentivised by the prospect of negotiating a good deal on their next home.
“Agreed sales at the end of May reached their highest level of the year so far, up 11% on the five-year average on the same period.
“However, there are some potentially darker clouds on the horizon as mortgage products are being pulled and the banks and borrowers are on tenterhooks awaiting the Bank of England base rate decision this week.
“People have got more used to the higher interest rate environment, but we could see further downward pressure placed on house prices if 6% fixed rates remain the norm.”
Nick Leeming, chairman of Jackson-Stops, commented: “Today’s figures show a slight uptick month on month but continue to point to a modest market rebalancing after the rapid acceleration of house prices during the pandemic. The speed at which prices rose, and held, surprised almost everyone as only the most optimistic could have foreseen this outcome in March 2020. After a moment of pause, property values are finding their new normal as the pendulum swings back into the favour of buyers; but only just.
“Clear pockets of the market continue to be well insulated from wider mortgage turbulence. Beauty spots such as North Norfolk, the Cotswolds and parts of the West Country, alongside well-connected commuter villages, remain characterised by low supply and a healthy pipeline of cash from London buyers keen to make the move.
“Whilst house prices may decline marginally across some areas as a as the year progresses the harsh reality continues to be that those at the lower end of the market will find themselves riding the biggest waves. First time buyers are faced with rising bills and dwindling deals, having to readjust their expectations. Both the Bank of England and the Government are acutely aware of the consequences of a high inflationary environment, but the tactic of rising interest rates alone may not yet be enough to turn the tide.
“Interest rates may still not have peaked. This means that today’s market, even with its challenges, continues to be a good time to sell for buyers committed to moving and wanting to achieve a good price, before any market readjustments filter through.”
Iain McKenzie, CEO of The Guild of Property Professionalsd: “In spite of the financial challenges facing many households across the UK, the housing market is still holding up strongly.
“A £7,000 fall in the average value of a house since last September may worry homeowners, but prices are still far above pre-pandemic levels.
“There will always be a demand for quality housing, and this will keep prices buoyant and help guide the property industry through the storm. Sellers need to feel reassured that their house is not losing any significant value, and buyers need stability in prices so that they can properly gauge how much it will cost them to get on the ladder.
“Affordability is the biggest concern for buyers at the moment, as surging mortgage rates play on people’s minds. Nobody wants to sign up to a mortgage and face the uncertainty of whether they can afford the repayments.
“As inflation will hopefully ease off in the second half of the year, so too will interest rates, and we should see confidence return to the market, as well as the availability of competitive mortgages.
“If you are considering selling your home, now is a good time to contact your local estate agent, as the market conditions vary across the Home Nations.”
Jason Tebb, CEO of OnTheMarket, commented: “These numbers are a little historic but show the continued, gentle slowdown in annual price growth in April, with the average property price still £9,000 higher than a year ago.
Continuing economic uncertainty is bound to have an impact on confidence, particularly as inflation proves to be even more stubborn than first thought. This suggests that interest rates will be higher for longer and there is more pain ahead for borrowers, which is bound to be at the back of would-be buyers’ minds.
While the Summer months are the best time to market a home, and people still need to move, challenges remain with buyer affordability. Sellers must price carefully if they wish to achieve a successful and timely outcome.”
Tom Bill, head of UK residential research at Knight Frank, said: “The UK housing market spent the first few months of 2023 overcoming the impact of the mini-Budget. The next hurdle is high inflation, which will keep upwards pressure on mortgage rates this year. We expect house prices to fall by around 5% and transaction volumes will be squeezed as rate uncertainty persists. That said, the wage growth driving core inflation higher is one of the reasons we don’t expect a steep double-digit decline in house prices.
“Record levels of housing equity, the availability of longer mortgage terms, a stable banking system and the recent popularity of fixed-rate products should also prevent a collective cliff-edge moment for the UK housing market.”
Jean Jameson, chief sales officer at Foxtons, added: “The market is busier than expected and the volume of sales across London is in line with what we saw last year, despite the rise in interest rates. Foxtons’ housing stock has significantly increased year-on-year and we’ve not seen a significant increase in stressed sellers in the residential market as a result of the interest rates rise. Since the mini-budget, sellers have had to be slightly more competitive with their pricing in order to stimulate interest in their property.”