House Price Update - downward pressure continues says expert

A prominent housing index claims prices are, on average, some 3.3% lower than a year ago but with the North East the first region to move out of negative territory.

Average house price in England & Wales now at £356,014, down 0.2% on April, down 3.3% annually, says e.surv.

Director Richard Sexton comments: “This month, the average sale price of a home in England and Wales in May fell by just over £600 (0.2%) to £356,014 which is about £12,000, or 3.3, lower than a year ago. Prices are now £23,000 (6.1%) below the peak reached in October 2022, but they still remain some £40,000 (13%) higher than at the start of the pandemic in March 2020.
 
“The pushing back of previously expected interest rate cuts by the Bank of England and the subsequent upward repricing of mortgage rates by lenders, has meant any anticipated help for borrowers has been short-lived. Less buyers, of course, has an impact on prices which we can clearly see being played out at a regional level.
 
“A real north south divide has opened up. London, the South East, and East of England are the regions with the weakest price trends and continue to struggle, reflecting the much higher house price levels, affordability challenges and greater reliance on mortgage finance in these regions - factors that really impact first-time buyers whose prospects of buying have been facing headwinds for years now.
 
“Much of this may change after the coming election as political parties are already promising action to support the first-time buyer market.”

e.surv says that over the past month there has been a mix of good news and less good news.

The picture on inflation was less positive than expectations and this pushed back the expected date for the start of reductions in the Bank rate. This was then reflected in some slight hardening in mortgage rates. At the same time underlying sentiment in the residential market remained positive and listings of homes for sale were rising. Consumer confidence was up and seasonally adjusted transactions (UK) also rose in April. In the round there is a general consensus that the housing market is continuing to recover albeit still subject to “monthly buffeting”.
 
Moreover, this mantra clearly varies by region and country and also by type of buyer. First-time buyers still remain under intense pressure as a recent Building Societies Association report on this subject has highlighted.

Over the last 50 years the average number of first time buyers with a mortgage in any year has been around 389,000. Last year there were 287,000 first time buyers according to UK Finance. Indeed overall there were some 580,000 mortgaged home purchases in 2023, continuing a downward trend that has been evident for much of this century.
 
The e.surv index underlines the reality that the housing market, as measured by both mortgaged and cash based transactions continues to be fragile, and this will likely remain the case until the Bank of England begins to actually lower interest rates and we move beyond the General Election.