House prices rise 1.7 per cent – but Brits advised they will keep coming down
Average UK house prices increased by 1.7 per cent in the 12 months to June down from a revised 1.8 per cent in May 2023, but property experts are warning this won’t continue for long.
New figures from the Office for National Statistics show the cost of a home in the UK is £5,000 more expensive than it was a year ago at £288,000 in June of this year. But this is £5,000 below the cost of a home last November when markets peaked.
On a seasonally adjusted basis, the average UK house price increased by 0.3 per cent in June 2023, following a month-on-month decrease of 0.3 per cent in May 2023.
With the Bank of England having hiked interest rates 14 times already – and a 14th expected next month, analysts are warning that the central bank’s cycle may be nearing an end – and pressure may start easing on homeowners soon.
The mortgage crisis has been most acute in the capital however, with brokers warning of a price war.
London still has the hottest property
London remained the most expensive region to buy a home, with the average home costing £528,000.
While the average house price in London increased by £3,000 between May and June 2023, there was a larger increase of £9,000 between the same months last year.
According to the ONS, this base effect has led to the “slowing of annual inflation” this month in London.
“This is the first negative annual inflation for London since November 2019, when average house prices decreased by 1.2 per cent,” it said.
Mortgage rates have been cooling over the past few weeks, with many lenders cutting the price of their deals, after an unexpected fall in inflation helped offset the Bank of England’s consistent rate rises.
While this may be a signal of hope for many prospective buyers, commentators appear to be more cautious about the outlook for the market.
“It’s written in the stars that house prices are declining and will continue for some time yet. Don’t be misled by the data about price rises in certain areas,” Lewis Shaw, mortgage expert at Shaw Financial Services, said.
“This is mainly due to the lag between agreeing to buy a property at a particular price and when the transaction completes and is reported at the Land Registry, which is massively behind the curve.”
“For example, the figures for June 2023 are based on sales agreed upon in February and March.”
Ross Boyd, chief of mortgage platform Dashly, said he expects “downward pressure” on house prices looks to continue throughout the year.
He said: “This latest house price data shows the complete reversal in momentum in the property market compared to a year ago. Summer 2022 feels like an age ago compared to where we are at now.
“Significantly higher mortgage rates have torpedoed the property market. London, based on this evidence, has been the hardest hit.”
“With core inflation remaining sticky, another base rate hike is now likely, so the downward pressure on house prices looks set to continue throughout 2023.”