Buyers ‘are Entering A Less Competitive Market’ As House Prices Fall

House price growth slowed to single digits in the 12 months to December 2022, thanks in part to a near 10% increase in the supply of properties for sale.

Residential property prices rose by an average of £26,000 over the year, according to the latest figures from the ONS, taking the median residential property price in the UK to £294,000. This is down from last month’s record high of £296,000.

Looking at the month of December alone, house prices actually fell by 0.4% or £2,000. This followed an increase of 0.2% in the previous month.

Nathan Emerson, chief executive of Propertymark, said: “As we moved into 2023, buyers and sellers were, and still are, well placed to take advantage of the ongoing positive shift in a more sensible market.

“Throughout 2022, our member agents saw a steady flow of new instructions with the usual traditional dips noted in December including a small drop in the total number of properties available for sale.

“Buyers are entering a less competitive market with competition dropping by over a third, which works well in their favour, but for sellers, house prices are still higher than this time last year, meaning they will see a comfortable gain when looking to move.”

Tom Bill, head of UK residential research at Knight Frankl, commented: “Buyers and sellers faced some pretty extreme turbulence at the end of last year due to a spike in borrowing costs caused by the mini-Budget. Mortgage rates are still high compared to where they were a year ago but, crucially, have stabilised and are inching down. Annual price falls are almost inevitable in the coming months but demand and supply have recovered strongly since Christmas, which means a double-digit price crash this year feels unlikely.”

Despite the fall in house prices in December, the housing market is showing green shoots as we head closer towards Spring, according to Nick Leeming, Chairman of Jackson-Stops.

He commented: “On an annual basis, sellers continue to be in a fortunate position, still able to achieve strong returns with the average house price £26,000 higher than a year prior. Positively for buyers, mortgage availability hit a six-month high in February with more than 4,000 deals available, returning to levels not seen since the mini-budget. This will be a welcome relief to a significant proportion of buyers who require a mortgage to complete their purchase, or had been put off from starting their search altogether.

“Even with the average mortgage rate remaining higher than recent years; currently the average two-year fixed rate is 5.36%* while if we look further back between 1995 and 2022 the average mortgage rate was 5.62%. This proves implicitly that mortgage rates since 2008 have been the exception, not the rule.”

Jeremy Leaf, north London estate agent, added: “Clearly, the direction of travel of the housing market is no longer strongly up but it’s not sharply down either.

“These comprehensive but dated figures lay bare the impact on prices of the ill-fated mini-Budget in the fourth quarter of last year.

“On the ground since, we are finding that buyers still have an appetite. However, they are increasingly flexing their muscles and adjusting to an improving bargaining position as stabilising mortgage rates and inflation bring more balance.”

How far will house prices fall this year?

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