In these turbulent times, we are all wondering how the UK housing market is doing and hopefully, this article will outline what is happening across the UK. This UK housing market update is to help our buyers and sellers understand what is currently happening in the market so they can make more informed decisions. Information from this report has been provided by our friends at Zoopla.

Executive Summary

Overall, the UK housing market in the UK has seen house prices fall by 1.6% across the UK. We have seen this with our own properties and believe that our clients understand this fall and have been guided by our professional valuation of their homes. That being said, the rate of price drops has started to slow as we get closer to the summer which is good news for sellers. The stronger growth in new sales has brought more sellers into the market and we have personally witnessed this over the last few weeks. It goes without saying that mortgage rates have been a concern for many although mortgage regulations in the UK have helped temper the impact of higher mortgage rates. It is without doubt that many are watching the market in terms of mortgage rates and this will still have an impact on the number of buyers in the market. However, there are some good deals out there and recent media has highlighted the approach of 100% mortgages for some.

Buyer Confidence & Mortgage Rates In The UK Housing Market

It is apparent that buyer confidence is improving and this has caused the fall of house prices to level off. Falling mortgage rates also helped slow the fall in the price of many homes across the UK, meaning that buyer confidence renewed as rates fell. Zoopla and many other sources believe that house prices will stabilise throughout the rest of 2023 which is a good sign for everyone. However, with that good news comes the fact that we still have to monitor interest rate rises and see what effect this has on mortgage rates, if any. We should remember that mortgage rates have always fluctuated and in 1981 they were on average 18.63% so we are still in a positive environment for most.

Despite weaker demand, the number of new sales agreed over the last 4 weeks is 11% higher than the 5-year average for the same period. As many buyers are also selling, more sales boost the flow of new homes for sale which is 16% up on the 5-year average.

While there are more sales being agreed, sellers must remain realistic on pricing to attract buyer interest. Some 18% of homes currently listed for sale on Zoopla have had the asking price cut by 5% or more, compared to 28% in February. Price reductions typically come 8 weeks after the first listing as sellers try to boost interest from buyers. Zoopla, 2023

Will My Home Sell Straight Away?

It is without doubt still a tough market but sellers shouldn’t be put off by their home not selling straight away. Current demand is a little weaker but overall the listing duration of properties is still in line with the five-year average across the UK. As long as the property is well-marketed and the valuation is done well by the agent then it should only be a matter of time before the right buyer comes along. As an estate agent, it is bad practice to inform any potential seller that their home will sell within a week, this is just not professional and sets unrealistic expectations on a seller, not to mention concern when their property hasn’t sold immediately. Listing a property on all the major portals such as Rightmove, Zoopla and On The Market means that your property is visible to buyers and as confidence grows then viewings will pick up.

Weaker Demand Where House Prices Have Outpaced Earnings

Looking at the bigger picture of the rise in house prices compared to the rise in earnings, especially in Wales means there is a weaker demand.

House price growth over the last 7 years has ranged from just 12% in London to 47% in Wales. Average earnings increased by 30% over the same period. Zoopla, 2023

As you can see from the above, house prices in Wales have increased substantially, even compared to London. This is why it is very important to have a professional valuation that not only looks at comparable properties in the area but also discusses the current market and empathy for the current economic situation. At the end of the day, our priorities will be to obtain the best price for your property in the current UK housing market.

UK home buyers have seen a significant increase in borrowing costs in the last year, which would historically have led to house prices falling. The impact of higher rates has been less pronounced than it might have been in the past due to mortgage regulations introduced by the Bank of England in 2015.

Anyone taking a mortgage since then has had to prove to their bank that they can afford a 6.5-7% mortgage ‘stress’ rate even though they were paying 1% or 2%. It is as if the housing market, and the ability to buy with a mortgage, has been operating at 6-7% rates already.

This is one key reason we have seen less of an impact on pricing thus far, but values remain sensitive to mortgage rates rising above 5%. Most lenders are currently testing affordability at >8% mortgage rates, hence below-average demand and fewer sales over 2023.