This report is to help give everyone – industry and consumers – a quick five-minute guide to what’s happening in the property market, according to the property indices, along with property expert Kate Faulkner’s comments.
Subdued August as market looks for autumn pick-up
“As expected, the annual price change drops further to -0.4%, the biggest drop since March 2019.”
Prices wilt but marketing times remain below pre-Covid figures
“Asking prices across England and Wales have slipped a further 0.4% since last month, although the year-on-year fall remains just -1.8%.”
Sales activity and prices remain under pressure due to elevated mortgage rates
“Ongoing fall in national house prices gains momentum over the month.”
House price growth remained weak in September
“Annual house price growth was unchanged at -5.3% in September. Prices were also flat over the month, after taking account of seasonal effects, following the 0.8% decline seen in August.”
UK house prices fell again in September, but pace of monthly decline slows
“Average house price fell by -0.4% in September, compared to -1.8% in August.”
Are buyers now ready to compromise?
“Annual UK house price inflation moves negative to -0.5%.”
Here are the most interesting and useful stats from this month’s indices:
For those that are interested in the England market, please see our regional price analysis below.
For Scotland, Wales, and Northern Ireland we monitor:
Please find a summary of the Scottish, Welsh and Northern Ireland markets below:
Summary from the indices of the Scottish housing market
“Scotland saw a slowing in annual house price growth to -4.2%, from -1.5% in Q2.”
“Scotland experienced a relatively modest annual decline of -0.8% (average house price of £201,594).”
“In Scotland, where prices are 40% below average, annual house price growth is running at +1.6%.”
Prices in July edge down from record highs
“The average house price in Scotland in July 2023 has increased by £762 - or 0.3% - over the last twelve months. This represents the weakest annual rate of growth since early 2019, before the Covid epidemic.
“Although there were almost equal numbers of local authorities reporting higher or lower prices In July 2023, with 15 of the 32 local authority areas in Scotland seeing their average prices rise above the levels of twelve months earlier and 17 authorities reporting price falls, this was in fact the first net negative balance since 2016.
“East Renfrewshire was the area on the mainland with the highest annual increase in average house prices in July 2023 – up 7.7% - followed by Midlothian (5.9%) and East Lothian (4.8%). Meanwhile, Stirling had the largest fall in prices over the previous twelve months, at -6.4%.
“Despite the more subdued nature of the housing market recently, several local authorities – East Renfrewshire, Midlothian, North and South Lanarkshire and West Lothian - have reported year-on-year price rises every month over the past year (albeit negligible increases in July in the case of North Lanarkshire and West Lothian).
“At the other end of the spectrum, Aberdeen was the only local authority in July to have consistently experienced annual house price falls every month over the past year. However, a total of 10 authorities have seen annual price falls for the last three months or more in a row.”
Summary from the indices of the Welsh housing market
“Wales saw a sharp slowing in the annual rate of change to -5.4%, from -1.4% last quarter.”
“Wales saw property prices fall by -3.6% over the last year (average house price of £214,585).”
Summary from the indices of the Northern Ireland housing market
“Northern Ireland remained the best performing region, with a modest 1.8% fall.”
“Northern Ireland currently has the most resilient house prices, down by just -0.2% compared to this time last year (average house price of £184,108), a fall of less than £400.”
Some super-duper commentary on regional performance from several of the indices now – the big market stories today are the enormous regional differences, but Zoopla has produced the most amazing insight this month, showing why each region is so different.
Commentary on the regional performance by indices is below:
“We believe that the variation in house price growth across the UK is partly explained by the ability of first-time buyers (FTBs) to buy at higher mortgage rates. FTBs account for 1 in 3 sales a year, most of whom originate from the private rental market. This means the dynamics of renting and buying will impact on demand and prices.”
“What you can see is that when you look at this chart and compare it to the one the experience for would-be FTB buyers varies across the UK. A renter buying the home they rent would find it cheaper to buy than rent in the six regions and countries with the lowest house prices.
“In Scotland and the North East average mortgage repayments are up to 18% lower than rental costs. This supports access to the housing market and the demand for homes.
“In contrast, it is more expensive to buy a home than to rent across all areas of southern England and Midlands. In London, the average monthly payment is 24% higher than the monthly rent. Higher mortgage rates are pricing more FTBs out of the sales market across southern England, reducing demand and compounding the downward pressure on house prices.”
All regions saw annual price falls in Q3
“Our regional house price indices are produced quarterly with data for Q3 (three months to September) showing annual price declines in all regions."
“The South West was the weakest performing region, with prices down 6.3% year on year. Across northern England (which comprises North, North West, Yorkshire & The Humber, East Midlands and West Midlands), prices were down 3.9% compared with Q3 2022. The North was the strongest performing northern region, with the annual rate of change improving from -3.3% to -2.0%, while the East Midlands was the weakest, with a 5.5% decline.”
“Meanwhile southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw a 4.8% year-on-year fall. London was the best performing southern region, although still saw a 3.8% annual decline.”
“All UK nations and the nine English regions registered a decline in house prices on an annual basis. Prices are under the greatest downward pressure in the South East of England, falling by -5.7% over the last year (average house price of £376,450).”
For city/town tracking, we use Land Registry (government data) and Zoopla/Hometrack. The Land Registry data is useful because we can analyse how property prices have changed over time and this helps us to put today’s price information into context.
The Zoopla/Hometrack data is useful as they take into account the change in mix of property transactions during the pandemic to houses away from flats. This has meant the likes of the Land Registry and other indices have over exaggerated price changes year on year.
Overall, out of 30 cities, since 2005, property prices have risen above the average 3.8% inflation in 11 cities/towns, including Edinburgh and Leicester. All the remaining towns and cities, price growth has remained below inflation. Even with the price growth seen during the pandemic, what this shows is that, in real terms, especially for those that own outright the property, they have isn’t necessarily delivering from an investment perspective.
Topping the price growth charts according to Land Registry and Hometrack:-
Lowest performers are:
It’s so important for everyone who owns property with cash – especially if investing – that property isn’t actually doing great. Where it gives a return on investment is when you leverage the money you have and prices go up. However, the recent hikes in mortgage rates has made this strategy much more difficult to deliver.
This chart shows that despite the growth over the last few years, as inflation is so high, property actually hasn’t held up that well – for everyone and that’s especially true of flats versus homes.