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House price future “doesn’t look brilliant” warns analyst

Many indices suggest house prices have already dipped, at least slightly, but “forward-looking indication don’t look brilliant either” according to one market analyst.

Data released by the Office for National Statistics yesterday, but referring back to January, show that average house prices in the UK increased 6.3 per cent annually, slowing sharply from a 9.3 per cent annual increase in December.

The average house price was £290,000 in January, some £17,000 higher than in January 2022.


However, Sarah Coles - head of personal finance at business consultancy Hargreaves Lansdown - warns that worse may be to come.  

“January was a miserable month for property. Three months on from the peak of mortgage rates in October, the horror of higher mortgages fed through into falling prices. We can expect more weakness from here, as prices continue to fall, but the jury is still out on how low things will go.

“Affordability calculations reveal just why rising rates have taken such a toll on buyer confidence. With the average full-time employee in England spending 8.3 times their annual income in order to buy a typical home, we’re being forced to take on ever-larger mortgages. It means a small change in mortgage rates has a far larger impact on our monthly payments.

“On the positive side, from October onwards, mortgage rates started to drop back, and while there were no sudden movements, there’s the hope that as they kept falling, confidence will have started to rebuild a little. We’ve seen a bit more volatility recently, but rates are still expected to trend downwards through the rest of the year as inflation eventually drops back.”

She continues: “Most of the forward-looking indications don’t look brilliant either. The Bank of England said that in January the number of mortgages approved for purchases in coming months fell for the fifth month in a row, and excluding the onset of the pandemic – when the market was effectively closed – it’s the lowest level of approvals since 2009. 

“Meanwhile, Zoopla has found that home sellers are cutting prices by an average of £14,100 – or 4.5 per cent to shift their properties -  and RICS continues to chart the fall in demand from buyers. If you’re planning to buy, the likelihood of falling mortgage rates and falling prices may persuade you to put off a purchase.”

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    I got as far as Hargreaves and stopped reading

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    TO be fair zoopla and rightmove can in theory monitor asking prices and sold prices and pick up some trends but it will be very variable depending on local factors. However this will always be a few months behind. If want to buy or sell now and if you can find a decent estate agent they will be able to let you know how things are looking locally.

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    Sunak's completely unnecessary Stamp Duty holiday and even more unnecessary extension of it caused asking prices to rise far more than they otherwise would have. How many times have we seen how tax changes distort the housing market? The announcement that joint MIRAS was being scrapped in the late 1980s caused 6 months of panic buying. Followed by prices falling off a cliff and 10 years of negative equity.
    Asking prices and sale prices have been a fair way apart for well over a year. In many cases estate agents were kite flying and mortgage valuers somewhat more grounded.

    My son bought a house last year. It went on the market in December 2021 at £310000. His offer of £292500 was accepted in March 2022. It eventually completed in October 2022. So all of that was before the current market conditions.

    I did a few remortgages last year and valuers were cautious (certainly compared to asking prices). One of mine valued at £450000 in May 2022. An identical one on the same estate went on the market 2 weeks later at £595000. They've dropped the asking price 4 times and it's just gone sale agreed off an asking price of £550000. No idea what they've actually accepted or if a valuer will agree with it.
    So has that house dropped in value by 7.5% or was it simply 32% over priced in the first place? Or was mine undervalued?

    It's not an exact science and journalists plucking random statistics and inappropriately quoting them isn't doing anyone any favours. Ultimately houses can only sell if people can afford to buy them. Equally they can only sell if the current owners can get enough to clear the current mortgage and cover all selling and moving costs. Lenders get very picky in a falling market and demand much higher deposits, which makes it fall even further.

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    I agree with Jo that Government interference does impact house pricing to some extent. Back in the late 80's it was the economic situation which caused the crash and the inevitable rise in rates, they make 4.25% look like a bargain, which it is to be honest. Section 24 is the problem here. Again economic situation is causing the dip in house prices, but i do believe it will be short lived, unless something fresh comes along, which is possibility.
    If you need to sell now then you will take a hit compared to the last 2 years. I'm not buying and if i was i would be offering at least 25% below the asking price! Just look at the auctions. The exception will be a few properties that are in highly desirable locations.....as always.
    I think this dip will be temporary, but only my opinion. Once the B of E stop putting rates up the market will be stronger, i don't mean a surge in prices but as an example a house in Bedford that i was going to sell were selling at £320-£330,000, if i needed to sell now it would be £270-£280,000. I plan to sell end of this year or early next for £300-£315,000. Currently letting as rooms to offset mortgage costs and have been completely transparent with my new tenants. I know this is a gamble but this is my current strategy. I do have time on my side at a youthful 57, I believe i'm right in saying that men don't mature until they're 70.....or should I not have put a number!! :)


    I'll let my wife know that as I turn 70 in Aug, she has been waiting 42 yrs for me to mature LOL


    I'm sure we can guess her reply.....


    Harold Wilson once said that Tony Benn was the only man he knew that immatured with age as he got even more loopy and lefty.

    However my wife and I both agree that I know far less and am much more childish than when we first met around 52 years ago!

    This view is shared by our three grown up kids but hotly disputed by the grandkids who want their broken toys fixed or replaced by a very wise old grandpa.

  • George Dawes

    Epc = prs rip


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