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Home prices fell 0.1% month-on-month in May 2023, according to the latest data from Nationwide.
Annual home price gains in the National Home Price Index have returned to -3.4% today from -2.7% in April.
House prices rose 0.4% in April, but fell 0.1% in May. The average UK house price is now £260,736 (not seasonally adjusted).
Commenting on the numbers, Robert Gardner, chief economist at Nationwide, said the slowdown in May’s house price growth largely reflected a “base effect”, with prices remaining roughly the same throughout the month, after accounting for seasonal effects. said it was flat.
He also noted that average prices are still 4% below the August 2022 peak.
“Recent data from the Bank of England showed signs of a recovery in housing market activity, but the number of mortgages approved for home purchases in March was still around 20% below pre-pandemic levels,” Gardner said. ‘ said.
“Additionally, headwinds for the housing market are likely to intensify in the near term.”
Gardner added: “In our view, a relatively soft landing remains the most likely outcome as labor market conditions remain strong and household balance sheets are in relatively good shape. I have,” he added.
“Economic activity is likely to remain subdued in the short term, but healthy growth in nominal incomes and a modest decline in house prices are likely to continue, especially if mortgage rates ease after bank rates peak. will help improve housing affordability in the long run.”
Industry reaction
Nathan Emerson, CEO, PropertyMark, Said: “The total number of properties for sale is returning to pre-pandemic levels, which is positively supported by the increased market valuations being conducted.
“This is causing an interesting shift in the real estate sales market as a decline in demand from buyers has allowed the number of available homes to rebound since the surge in activity seen during the pandemic. We are still seeing stable levels of trading, which is good news for the market and the economy as a whole.”
Chris Druce, Senior Research Analyst, Knight Frank, Said: “UK house price data have been volatile in recent months, partly because of the mini-budget uncertainty that led to a decline in transactions early in the year. It suggests that the time has come.
“There is still an element of price seeking in the residential real estate market as buyers and sellers adjust to a decline in purchasing power caused by the significant increase in borrowing costs over the past 18 months.
“An improving economic outlook and a strong job market have supported buyer sentiment in recent months, creating a brisk spring season, but further expected increases in borrowing costs following last week’s inflation data will act as a brake. ‘ said.
“With this pressure and increased supply compared to the pandemic period, we expect UK property prices to fall by a few percentage points this year.”
Benham & Reeves Director Marc von Grander said: “While the year is off to a promising start so far in terms of buyer interest returning to the market, we have not seen any reversal of interest at the same rate.
“Rising interest rates have been the main cause of this buyer hesitation, and while the market remains strong, it is this more cautious buying approach that is driving home prices down.”
James Forrester, Managing Director, Burroughs & Forrester, said: “We expect this weak performance to continue in the coming months as the market remains at a standstill over concerns about the current rate of home price appreciation and further interest rate hikes are likely this month.
“The naive will sit for a while in hopes of returning to the glory days of the pandemic of double-digit price gains. There has always been a chance, but there is no sign of a market crash yet.”
Chris Hodgkinson, Homebuyers’ Authority Managing Director, said: “To say the least, market performance has been mixed so far this year, and this uncertainty has been a problem for domestic homebuyers and sellers who continue to scramble to negotiate prices.
“These interactions result in even longer transaction schedules and a greater threat of poor sales. That said, buyer activity has increased and the current situation is certainly more challenging than before. But those who can bargain are still getting homes at good prices.”