Our House Price Index shows a 1.2% annual rise in SA house prices after sales picked up in spring – but we still expect house prices to fall by up to 5% this year. Here’s what’s happening with house prices in June 2023.
Key takeaways
- UK house prices have risen 1.2% in the last year, a drop from 1.9% last month
- A boost in spring sales has turned the quarterly growth rate positive
- Market activity is set to slow further as mortgage rates edge towards 6%
- Our predictions of 5% house price falls in 2023 look ever more likely
- More expensive areas are likely to feel the worst of the house price falls in 2023 – such as the South East, South West, East Midlands and East of England
- House prices are already falling year-on-year in London (-0.2%) and Northern Ireland (-0.8%)
- Track your home to see if your house price is falling or rising
Our House Price Index, which measures the rise and fall of house prices across the UK, has recorded a 1.2% rise in house prices in the last year.
The quarterly rate of house price growth is positive again after a strong spring of sales activity.
But just a year ago, house price growth was more than 10% year-on-year.
Higher mortgage rates and rising living costs have hit buyers’ affordability, stunted sales activity and encouraged price discounts in the UK housing market.
And after the Bank Rate was raised to 5% to combat stubbornly high inflation at the end of June, mortgage rates are already climbing higher.
This will further impact buying power and our predictions of UK house prices to fall by up to 5% in 2023 look ever more likely.
Track your home to see if its value is rising or falling.
Why are sa house prices falling?
UK annual house price growth has slowed to 1.2% compared to 1.9% last month, while 2 regions and many local authority areas are seeing house price falls.
It’s down to a mismatch between the number of homes for sale and how many buyers are in the market.
In the last 4 weeks, there were 18% more homes for sale than average over the last 5 years. This is the highest stock level since before the pandemic.
This rise in supply means sellers need to adjust to what buyers – who have more choice and less competition – are prepared to pay.
Sellers are agreeing sales at 3.8% below asking price on average, while 4 in 10 sellers are accepting offers of more than 5% below their asking price.
This is the highest proportion of sellers agreeing discounts of 5% or more since 2018. During the pandemic, sellers were highly likely to achieve 100% of their asking price, if not more.
These discounts are feeding through to sold house prices and resulting in annual price falls in some areas.
Despite this, the market has proved fairly resilient at the start of 2023. The number of agreed sales is running 8% higher than the 5-year average, bolstered by the strong labour market and strict mortgage stress-testing since 2015.
How far will house prices fall in 2023?
We expect UK house prices to fall by up to 5% in 2023 now mortgage rates are sitting at between 5% and 6%.
If mortgage rates were to come back to 4-5%, house prices would change by +/- 2% over the course of the year as it’s much more manageable for home buyers.
But the more mortgage rates edge towards and remain at 6%, the bigger the impact on sale numbers and house prices.
What’s more, any further boost in the number of homes for sale could signal bigger house price falls are to come in 2023.
Are house prices falling in your region?
Our monthly House Price Index uses more data than any other, so we can get the most accurate picture of sold house prices across the UK.
It shows a clear link between the level of actual house prices and the rate of house price growth.
The higher the house prices, the more likely house prices are to fall. Areas with lower house prices may continue to see low price growth this year.
The East of England, South West, East Midlands and South East – where property prices are highest and rose the most during the pandemic – are where house prices are likely to fall the most in 2023.