What are the key facts from the current UK house price index?

The key takeaway from the current house price index is that house prices are currently worse than they were a year ago, but are still far better than they were in the pre-pandemic years, and property agents Zoopla expect the year to be a positive one overall ‘for homeowners, buyers and sellers alike’.

Current housing prices

We are now in a ‘buyer’s market’, which is good news for first-time buyers, though not necessarily for those looking to sell their home. Annual house price inflation has slowed to 5.3%, which is down from 8.6% last year. Sellers may need to discount their asking price by 4-5% to meet the current market demands, which represents the largest gap between asking and sale prices for five years.

Mortgage deals are available below 4% for lower loan-to-value remortgages, compared to the average rate of 6% in November last year, although the average home buyer has 20% less buying power than they did a year ago.

Current state of supply and demand

Buyer demand and sales volume are also lower than during the pandemic, and lower than this time last year, but are still above pre-pandemic figures. The upside to this is that the slower sales have meant that more homes have been able to enter the market, with the average estate agent office currently having 24 homes for sale compared to 15 last year, meaning more choice and negotiation ability for home buyers.

How did the pandemic affect house prices?

The pandemic had a significant effect on UK house prices, presenting the biggest housing boom since 2006, with the average homeowner making £42,000 on their home between 2020 and 2022. However, this boom is now over, and we are experiencing an extensive repricing of homes after those unprecedented times, meaning sellers are losing, on average, a third of the additional property value gains achieved during the pandemic.

What other factors are affecting the UK housing market?

Economic factors such as the cost of living crisis and especially higher mortgage rates are significant factors in the fall in buying demand and what prospective buyers are willing to pay for a new home. Conversely, when there are more buyers competing for houses, this often causes house prices to rise, in what is often referred to as a ‘seller’s market’.

Are housing prices the same across the country?

While many of the figures presented by the house price index represent the average across the UK, regional variations do demonstrate that growth is not equal across all locations. According to Zoopla, the annual growth ranges from +2.5% in London on the lowest end of the scale to +7.1% in Wales.

The strongest price growth in the current housing market comes from affordable towns that are within commuting distance of the UK’s major cities. Housing prices within cities have long been a more costly option, often for less property. It is perhaps not surprising that buyers are looking to get more for their money by choosing houses that are outside major cities, especially when commuting is an option.

Zoopla have found that prices are rising more than 8% year-on-year in these types of towns, such as Oldham, Dudley, and Wolverhampton, for example.

More affordable markets such as Scotland and the North East of England are also experiencing more sales than in pre-pandemic years. This is believed to be because high mortgage rates are not impacting lower-value markets as much as they are in the mid to higher value markets, such as southern England.

Conveyancing is an essential part of the process of buying or selling a home, but the legal proceedings surrounding a sale can be complex, which is why expert guidance is advised.

Here at Kitsons, our expert property team are on hand to assist you with every step of the conveyancing process, whether you are looking to buy, sell, or remortgage your home. For more information or to get an instant quote, please visit our conveyancing page.