Yahoo News London house price growth slows while rents record greatest increase since 2013
London recorded the lowest price growth of any region in England in the year to January 2023, according to the Office of National Statistics (ONS).
House prices in the capital remain the most expensive of any region in the UK, with the annual increase of 3.2 per cent in January taking the cost of a home to £534,000 on average.
As the housing market and mortgage borrowers continue to adjust to the impact of the cost of living crisis and higher interest rates, forecasters still believe London prices will likely fall by between five and 10 per cent this year.
The region to have performed best for house price growth was the North East, where prices increased by 10 per cent in the year to January 2023. House prices in the North East now average £163,000, the lowest of any region.
Across the UK, annual house price growth has slowed to 6.3 per cent. The average cost of a UK home is now £290,000 which is £17,000 higher than in January 2022.
Tom Bill, head of UK residential research at Knight Frank, said: “January’s drop in annual house price growth tells us a lot about the detrimental impact of the mini-budget but very little about how the UK property market will perform this year.
“After effectively switching off for the final quarter of 2022, demand and supply have been solid this year and sales volumes will eventually catch up against an economic backdrop that is proving stronger than expected.”
London rents rise
Meanwhile, private rental prices in London increased by 4.6 per cent in the 12 months to February 2023, accelerating from a 4.3 per cent rise in the 12 months to January 2023.
This is the strongest annual percentage growth in London since January 2013.
Rental prices paid across the UK increased by 4.7 per cent in the 12 months to February 2023 which is the largest growth since comparable records began in January 2016.
ONS head of housing market indices, Aimee North said: “Annual house price inflation, measured using final transaction prices, slowed again in January, consistent across all nations and regions.
“UK rental prices continued to climb, with the strongest growth since records began in 2016.
“The surge in London’s rents remained evident with the highest annual percentage increase in over a decade.”
UK house prices — and what’s to come
The average house price in Scotland increased by one per cent over the 12 months to January 2023. The average house price in Scotland was £185,000 in January 2023.
Annual house price inflation in Scotland has generally been slowing since a recent peak of 13.8 per cent in the 12 months to April 2022.
The typical house price in Wales increased by 5.8 per cent over the 12 months to January 2023. The average house price in Wales in January 2023 was £217,000.
In England, the average property value increased by 6.9 per cent over the 12 months to January 2023. The average house price in England was £310,000 in January 2023.
And in Northern Ireland, the average house price increased by 10.2 per cent annually, with the average house price there at £175,000.
Nicky Stevenson, managing director at estate agent group Fine & Country said: “A significant proportion of the sales completed at the beginning of the year had to weather the impact of autumn’s mini-budget and sudden rise in mortgage rates and many buyers will have renegotiated on price as a result of changing affordability.”
The problem with the housing market at the moment is that buyers think it is 2008 and sellers think it is 2020. Both are wrong
Mike Staton, Staton Mortgages
Jeremy Leaf, a north London estate agent said: “The reasons for moving haven’t disappeared as buyers are slowly returning, encouraged by falling mortgage rates.
“Although viewings are up, sales conversions are harder due to more choice and increased buyer caution.”
Emily Williams, director of residential research at Savills said: “Some markets continue to outperform. The North East saw a slight increase in average values between December 2022 and January 2023, reflecting the region’s limited exposure to mortgage affordability pressures.”
“Savills expects regions furthest from London, and cash and equity rich markets which are least reliant on borrowing to be the strongest performers over the next five years.”
Mike Staton, director of Mansfield-based mortgage broker, Staton Mortgages said: “The problem with the housing market at the moment is that buyers think it is 2008 and sellers think it is 2020. Both are wrong.”
Jason Tebb, chief executive of property search website OnTheMarket.com said: “While market conditions are more challenging, as we head into spring and what is traditionally a busier time of year for the market, properties must be priced correctly in order to achieve a successful outcome.”
