More drops in the housing market are expected this year with levels already slowing and property prices falling from their peak levels. This is despite the latest official data from the Land Registry showing a 9.8% year-on-year house rise in December 2020, figures are now falling month-on-month.
Experts anticipate more significant movement in 2023, with the downward trajectory continuing amid the rising cost of living and high mortgage rates.
How have house prices changed?
The pandemic and stamp duty holiday brought about a more strained market and house prices rose considerable in last couple of years.
The Land Registry's UK House Price Index is the most reliable source of what's happening to house prices, as it's based on actual property sales rather than asking prices. It works on a two-month lag, so the most recent figures are for December 2022.
The Land Registry says the average price of a property in the UK rose by 9.8% year-on-year in December 2022 to reach £294,329. However, figures from Halifax show the extent of price increases between January 2020 and December 2022, with average UK house prices rising by 20.4% in that short space of time.
More recent figure show price drops and the most recent Land Registry data shows a 0.4% downturn.
Last November saw Halifax record its biggest monthly fall (-.4%) since the beginning of the financial crash in 2008, while Nationwide has reported six consecutive monthly house price drops since September.
How do other house price indices compare?
Rightmove, Nationwide and Halifax publish their own monthly data, although Rightmove is based on asking prices rather than confirmed sales. Nationwide and Halifax’s monthly data is based on mortgage lending.
All three providers - albeit by varying amounts - are currently reporting much lower price growth than the Land Registry year-on-year, as shown in the table below.
House price index | Month-on month change | Year-on-year change |
Rightmove (Feb 2023) | 0% | 3.9% |
Nationwide (Feb 2023) | -0.5% | -1.1% |
Halifax (Feb 2023) | +1.1% | +2.1% |
How many homes are being sold?
2021 saw the property market boom due to the temporary cut in stamp duty. This in turn resulted in a spike of sales around the deadlines in June (when tax savings of up to £15,000 were available) and September (when savings of £2,500 were available).
January usually sees a drop off in transactions, however, compared with January 2022 purchases there has been a fall of 7% bringing the number of purchases each month closer to pre-pandemic levels. The most recent data from HMRC shows that around an estimated 77,000 transactions went through in January - a fall of about 30,000 from December.
What will happen to house prices in 2023?
With the cost-of-living crisis and high mortgage rates the number of homes being sold are likely to be affected, however, experts have predicted house prices have reached their peak and will therefore fall in 2023.
Early last year, experts forecasted relatively flat price growth for 2023, but economic uncertainty following the government's mini-budget last month has resulted in predictions of price falls making the long-term picture complicated.
The Office for Budget Responsibility (OBR) expects a 9% decrease between now and autumn 2024, while Rightmove is only anticipating a 2% drop this year.
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