Slight monthly fall in property prices but housing market displays resilience7 Aug 2023 07:29
“Average UK house prices edged down slightly in July, with the monthly fall of -0.3% equivalent to a drop of
around £1,000 in cash terms. While this was the fourth consecutive monthly decrease, all have been smaller
than -0.5%.
“In reality, prices are little changed over the last six months, with the typical property now costing £285,044,
compared to £285,660 in February. The pace of annual decline also slowed to -2.4% in July, versus -2.6% in
June. These figures add to the sense of a housing market which continues to display a degree of resilience in
the face of tough economic headwinds.
“In particular, we’re seeing activity amongst first-time buyers hold up relatively well, with indications some are
now searching for smaller homes, to offset higher borrowing costs. Conversely the buy-to-let sector appears to
be under some pressure, though elevated interest rates are just one factor impacting landlords’ business
models, together with considerations of future rental market reforms. It remains to be seen how many may
choose to exit and what that could mean for the supply of properties available to buy.
“Prospects for the UK housing market remain closely linked to the performance of the wider economy. Several
factors are providing support, notably strong wage growth, running at around +7% annually. And, while the
uptick in unemployment is likely to restrain that somewhat, it seems unlikely to reach levels that would trigger a
sharp deterioration in conditions.
“Expectations of further Base Rate increases from the Bank of England were tempered by a better-thanexpected inflation report for June. However, while there have been recent signs of borrowing costs stabilising or
even falling, they will likely remain much higher than homeowners have become used to over the last decade.
“The continued affordability squeeze will mean constrained market activity persists, and we expect house prices
to continue to fall into next year. Based on our current economic assumptions, we anticipate that being a
gradual rather than a precipitous decline. And one that is unlikely to fully reverse the house price growth
recorded over recent years, with average property prices still some £45,000 (+19%) above pre-Covid levels.”
https://www.pmi.spglobal.com/Public/Home/PressRelease/ce2d47a6c9074b4cbe516a89a337d388
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