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  • Writer's pictureElliot Leigh

House prices fall, rent prices rise - March 2023

Updated: Apr 4, 2023

March has seen house prices fall at their fastest annual pace for 14 years, according to latest figures from Nationwide. On the flip side, a rental index by Goodlord, reported a slight increase in rents across England.

House prices have dropped down 3.1%

A recent Housing Index report by Nationwide showed that house prices have dropped down 3.1% compared to the same time last year, and is the largest annual decline since July 2009. Robert Garner, Nationwide’s chief economist said, "It will be hard for the market to regain much momentum in the near term, since consumer confidence remains weak and household budgets remain under pressure from high inflation.”

The Nationwide's findings, based on its own lending data, suggest prices have now fallen for seven months in a row. This echoes the general conclusion of other house price surveys and commentary, which show a slowdown in the sector and falling prices.

Source: Nationwide House Price Index March 2023

Robert Gardner also commented: “The housing market reached a turning point last year as a result of the financial market turbulence which followed the mini-Budget. Since then, activity has remained subdued – the number of mortgages approved for house purchase remained weak at 43,500 cases in February, almost 40% below the level prevailing a year ago.

It will be hard for the market to regain much momentum in the near term since consumer confidence remains weak and household budgets remain under pressure from high inflation. Housing affordability also remains stretched, where mortgage rates remain well above the lows prevailing at this point last year."

While a drop in house prices might be considered a setback for existing homeowners, more-so those with properties currently on the market, it could be welcomed by potential first time buyers, especially over the last few years where property values have surged.

Rates surged after last year's mini-budget during the short-lived Liz Truss government. This led to a panic in the property market that has seen house prices dropping in some areas of the country. At the same time, there is huge concern for property investors and a major factor in the slowdown in the sector.

Whether you've just taken out a mortgage, or have been paying for decades, the high cost of mortgages is something that affects us all. Although the rates have dropped back partially since, a succession of base rate rises by the Bank of England have fed through - so interest rates on home loans are higher now than people became accustomed to in the past decade.

Rent prices are now 8% higher since 2022

As a result of these higher mortgage rates, the reality is that renting has become more expensive for many people. According to findings from Goodlord, rents are still high when compared to February’s figures. Tenants in England are now paying £1,090 on average – that’s up 0.14% month-on-month – and is the highest rise recorded since last October. The continuing rise in many regular bills and food prices are also adding to the financial strain.

Goodlord says that rent prices are now 8% higher year-on-year than 2022 levels and voids have also remained steady with the average void period moving up from 17 days on average in February, to 18 days.

Average monthly rent in England | Source: Goodlord Rental Index March 2023

Tom Mundy, COO of Goodlord, comments: “March was a consistent month for the market, matching February prices and voids very closely. In the coming months, however, we predict rents to creep back up towards levels since last summer. And the void picture in major urban areas, such as Greater London, offers another strong indication that demand remains high and shows no sign of abating."

Although the UK's housing market is made up of a series of local property sectors, both findings for the first three months of 2023, suggests a slowdown across all areas of the country.

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