22 March 2023
If you are covering the UK house price index for January, please see the following comment from Karen Noye, mortgage expert at Quilter:
“The latest UK house price index shows the housing market kicked off 2023 as expected, with a fall of 1.1% in January in comparison to the month prior. House prices have continued to slow in recent months, and the annual price rise currently sits at 6.3% - down from 9.3% in December. The average UK property now costs £289,819.
“The ongoing cost of living crisis and increased energy bills have had a significant impact on the housing market, as did the fallout of the ill-fated mini budget, but the market has so far been more buoyant than predicted. While we have seen a dip in prices in recent months, the dramatic fall that had been rumoured is yet to materialise and the slightly more stable mortgage market could see it held off for the time being.
“However, the current economic circumstances mean we are unable to rule out further turbulence in the housing market. This morning’s UK inflation data show the UK’s battle with inflation will not be smooth sailing, as CPI unexpectedly rose to 10.4% rather than falling to single digits as had been hoped. This leaves the Bank of England in a difficult position as it may not yet be able to press pause on rate hikes, though positively for house buyers fixed-rate mortgages are likely to continue on their downward trend even if the Bank does opt to raise rates further.
“What’s more, in February 2023 UK residential property transactions saw a significant drop of 18% compared to the same month last year and a further decline of 4% from the previous month. For now, the lack of transactions in the market will have a material impact on house prices, pushing them downwards as sellers compete for buyers – reversing how the market has operated over the last few years.
“For those looking to move house, it is worth exploring the options available to you and looking to fix for two years to limit the amount of time spent fixed on an inflated rate. If you are comfortable with taking more risk, a tracker mortgage may be worth considering. Where possible, you should seek professional financial advice to ensure you are making the best possible decisions for your circumstances.”
