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UK property market in the deep freeze

Housing market outlook

Economic uncertainty weighs on the residential market. The most recent UK Housing Market Update from Savills has highlighted that buyers’ budgets continue to be impacted by higher mortgage rates, and although inflation has begun to move lower, core inflation remains ‘unexpectedly sticky.’

During July, with completed sales reducing by 18% on the 2017-19 average, market activity was notably subdued, according to HM Revenue & Customs (HMRC) data. Accordingly, during the three-month period to July, mortgage approvals were 23% below 2017-19 levels and sales agreed were 12% below the average (2017-19 levels). In its report, Savills referred to the most recent Royal Institution of Chartered Surveyors (RICS) survey, in which most surveyors reported decreasing demand and supply, which is likely to continue suppressing activity and house prices over the coming months.

Looking at UK annual rental growth, Hamptons Lettings index has shown that the cost of renting a new property was 12% higher in August compared to the previous year. The biggest increase was in Greater London, rising by 17.1% year[1]on-year to bring the average to £2,332 per month. After that comes Scotland, with an increase of 13.4%

Housing market outlook

“We do expect further downward pressure on property prices through to the end of this year and into next, in line with previous forecasts. While any drop won’t be welcomed by current homeowners, it’s important to remember that prices remain some £40,000 (+17%) above pre-pandemic levels. It may also come as some relief to those looking to get onto the property ladder” Kim Kinnaird, Director, Halifax Mortgages

Read more in our residential housing review here.

Source: Halifax September 2023