UK house prices slipped back by £1,000 in April 2023 amid continuing ‘volatility’ in the economy, the latest Halifax House Price Index (HPI) has revealed.
It marks the latest sign of continuing uncertainty in the housing market in the wake of Liz Truss’s mini budget. The wider cost of living crisis also appears to be weighing on homebuyers’ ability to afford a deposit and current mortgage rates.
Near-record inflation and high interest rates have reduced the spending power of everyone, although separate Halifax research has shown that some UK seaside towns have apparently remained immune to any downturn. Generally, the cost of a typical home remains close to the record highs recorded in 2022.
Halifax’s data comes after fellow mortgage lender Nationwide recorded the biggest downturn in prices since 2009 in its own HPI. Other analyses by Zoopla and Rightmove have shown sellers appear to be accepting greater discounts on their initial asking prices in a bid to attract buyers. Meanwhile, official statistics show any downturn in prices has been much less pronounced at the completion stage of purchasing a property.
So, what does Halifax’s latest HPI for April 2023 show us - and what does the bank think will happen to the property ladder this year?
What is the Halifax HPI?
The Halifax HPI is a property price index that has been analysing UK house prices on a monthly basis since January 1983. It measures the market by looking at mortgage offers.
The bank is responsible for 15% to 20% of the UK mortgage market. It means the Halifax HPI is a good measure of house prices as they appear later on in the buying process - although it doesn’t necessarily mean the deals tracked have gone on to be completed.
Some indices - like Rightmove’s - look at asking price data, which tends to reflect seller sentiments as they currently are but does not show how far above or below the asking price the properties are actually sold for.
Others analyse land registry data, which reveals the actual price the property sold for and accurately tracks how much activity there has been in the property market, but tends to be less up-to-date.
What does March 2023 Halifax House Price Index show?
Halifax’s April 2023 HPI shows house prices dipped month-on-month, although they are still marginally higher than they were this time last year.
The average UK property price of £286,896 is a £1,000 (0.3%) drop on March 2023’s figure, and has halved the gains recorded between February and March. On an annual basis, typical prices are just 0.1% higher than they were in April 2022.
While the average home is coming in at almost exactly £7,000 (2.4%) below the all-time peak of £293,992 recorded in August 2022, it is well above a low of £281,713 recorded in December. Liz Truss’s mini budget was largely responsible for monthly falls of 2.4% and 1.3% in November and December.
To put the latest figure into a longer-term context, average prices are around £10,000 above where they were at the start of 2022. It means recent declines have not come close to wiping out the gains the housing market made during Covid-19.
According to Kim Kinnaird, director of Halifax Mortgages, the current situation with house prices reflects the “short-term volatility” we are seeing in borrowing costs. “The sharp fall in prices we saw at the end of last year after September’s Mini Budget preceded something of a rebound in the first quarter of this year as economic conditions improved,” she said.
“The economy has proven to be resilient, with a robust labour market and consumer price inflation predicted to decelerate sharply in the coming months. Mortgage rates are now stabilising, and though they remain well above the average of recent years, this gives important certainty to would-be buyers. While the housing market as a whole remains subdued, the number of properties for sale is also slowly increasing, as sellers adapt to market conditions.
“Alongside a market-wide uptick in mortgage approvals, these latest figures may indicate a more steady environment. However, cost of living concerns remain real for many households, which will likely continue to weigh on sentiment and activity.”
Ms Kinnaird added that she expects the gradual filtering down of high interest rates into the economy to lead to “further downward pressure on house prices” as the year progresses. The Bank of England is expected to increase its base rate again on Thursday (11 May).
Her comments come after HMRC data showed the number of UK property sales increased 1.3% month-on-month to 89,560 in March 2023. On a quarterly basis, sales are 10.2% down on the volumes being seen between October and December last year and 18.9% below the level of activity being seen in the first quarter of 2022.
What’s happening to house prices in the UK nations and regions?
House prices across the UK have been edging lower compared to last year over recent months. In part, this is because of 2022’s record prices and rapid growth, which the housing market would have struggled to match even without Liz Truss’s Mini Budget.
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Several UK nations and regions now have lower prices than they did in the three months to April 2022. The South East is leading the descent, with prices now 0.6% down on last year’s comparable figures. Eastern England (-0.4%), Greater London (-0.2%) and the South West (-0.1%) have also recorded declines. Halifax says this reflects the impact of higher mortgage costs, given these areas tend to be the most expensive in the country.
At the other end of the scale, the West Midlands (+3.1%) and North East (+3%) continue to see prices climb. However, their average prices are still well below those of London and the South East. Northern Ireland (+2.7%), Scotland (+2.2% and Wales (+1.0%) are also continuing to register increases.