Annual house price growth slowed to 1.1%, from 2.8% in December and the monthly average house price fell 3.2% below last August’s peak in the latest January 2023 Nationwide HPI
January 2023’s Nationwide HPI analysis shows that house prices dropped by 0.6% compared to December of last year.
The average price of a home fell by nearly £4,000- from £262,068 to £258,297- in January 2023.
Robert Gardner, Nationwide’s chief economist, observed that activity in the housing market was still stagnant after the Bank of England reported a fall in house purchase approvals in December- a remnant of the crash in mortgage applications following the September 2022 mini-budget.
Mortage rates are beginning to stabilise but economic pressures are still severe on consumers
Mortgage rates have shown signs of returning to regular levels after skyrocketing in the wake of the September mini-budget, but the cost-of-living crisis has reduced the number of consumers willing or able to take on a new mortgage, leading to the slowing market observed over the past few months.
Nationwide found that the south of England and London were facing the most severe mortgage servicing costs compared to a year ago. Scotland and the North remained the most affordable regions but the level of mortage payments as a share of take-home pay were at the highest levels for a decade.
With the Bank of England reportedly considering raising interest rates again this week- the tenth consecutive such rise- the outlook for the UK housing market remain cautious.
Industry voices are optimistic in reponse to the January 2023 Nationwide HPI figures
Nicky Stevenson, managing director at Fine & Country commented: “Subdued buyer demand is the strongest factor dampening house price growth, though average prices remain higher than they were a year ago, and 12% higher than they were in January 2021.
“Although buyers have returned to the market in greater numbers since the shocks of the mini Budget last autumn, the Bank of England saw home loan approvals ease for the fourth consecutive month in December.
“A month without a base rate rise – when it finally comes – could be enough to produce a quick turnaround in home-buyer numbers.
“As the Bank of England weighs up whether to make a tenth successive hike in interest rates tomorrow, buyers will be hoping lenders have factored another rise into their products already. If mortgage rates remain stable, this could be enough to convince many people to resume their property search.”
Iain McKenzie, CEO of The Guild of Property Professionals, says: “House prices saw another modest fall in January, but a few signs mean there’s hope on the horizon.
“The affordability factor is the biggest concern for buyers right now, particularly those just starting on the property ladder. Mortgage rates went through the roof last year and shifted the goal posts for those saving for a deposit. It appears as though we are seeing some stability returning to the market.
“The public can be assured that now is still a good time to buy if you are in a position to do so. You may even be able to save some money on the asking price.
“The economic backdrop remains challenging, but employment remains high, and fuel costs have fallen dramatically from their record highs last year.
“With signs that inflation peaked at the tail end of 2022, buyers can be optimistic that the situation will improve in the coming months.”
Market correction rather than depreciation
Jack Roberts, CEO of home moving platform SlothMove responded to the January 2023 Nationwide HPI figures: “It’s helter-skelter time for the housing market, with confusion reigning while the only real momentum is downwards.
“It seems like only yesterday average house prices were climbing towards £300,000. Now they are nearing £250,000 and talk of soft landings for the market is becoming quieter.
“Yet there are still winners out there. With the tremors of last autumn’s disastrous mini budget finally subsiding, the price war on mortgage is seeing rates threaten to dip below 4% for the first time in months. This, along with the falls in asking prices, will be giving some first-time buyers a better chance to get on the housing ladder.
“Those looking to trade up could also be buoyed as the gap between their current rate and that on a new loan looks increasingly bridgeable.”
Managing director of House Buyer Bureau, Chris Hodgkinson, commented:
“While the market remains fairly strong, we can expect the herd mentality of the nation’s homebuyers to continue to dampen house price growth.
During the pandemic boom, homebuyers were falling over themselves to offer above the odds to secure a home. This tide has very much turned and while there remains a robust level of market activity, we’re seeing a more reserved approach during the negotiation stage.
As a result, the nation’s sellers are meeting in the middle and accepting a slightly lower price for their home, but this is very much a market correction rather than a slippery slope of house price depreciation.”
