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  • Writer's pictureMortgage Tree

House Price Expectations Jan 2023

House prices fell in January and the annual rate of house price growth has continued to slow but house prices are still higher than they were at the start of 2022. There are encouraging signs that mortgage rates are beginning to stabilise but with higher borrowing costs, housing affordability remains stretched and activity is likely to remain subdued until real incomes begin to rise and the economic outlook becomes clearer.

What the experts say

Rightmove - agent's view “Premium property prices seen over the last 18 months have largely disappeared which in turn has encouraged buyers back into the market and sales enquiries are on the rise. The initial shock to the housing market last autumn, after the mini-budget, has subsided. People are looking ahead and putting their moving plans into action. As mortgage rates start to lower and inflation moves under control, we’re seeing an uptick in demand from those who’ve taken a long-term view to investing in their next home. Many of our sellers are opting for realistic asking prices to reflect the changing market conditions. This puts them in a strong position to attract early interest, generate positive enquiries from good buyers, and increase prospects of an earlier sale. Along with increases in viewing levels seen so far in 2023, we’re also receiving more requests for valuations. This bodes well for a reasonably balanced market in the months ahead, where supply and demand are more evenly matched.”

Nationwide “The start of 2023 saw a further slowing in annual house price growth. However, there are some encouraging signs that mortgage rates are normalising, but it is too early to tell whether activity in the housing market has started to recover. It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks. The biggest change in terms of housing affordability for potential buyers over the last year has been the rise in the cost of servicing the typical mortgage as a result of the increase in mortgage rates. Should recent reductions in mortgage rates continue, this should help improve the affordability position for potential buyers, albeit modestly, as will solid rates of income growth (wage growth is currently running at around 7% in the private sector), especially if combined with weak or negative house price growth.”

Halifax “The start of 2023 has brought some stability to UK house prices, with the average house price remaining largely unchanged in January. We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years. As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand. For those looking to get on or up the housing ladder, confidence may improve beyond the near-term. Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home buying affordability over time.”

Zoopla (Hometrack) “It’s going to be a slow start to 2023 but we expect demand to pick up in the coming months as the economic outlook becomes clearer and mortgage rates settle around 4% to 4.5%.”

RICS “The January 2023 RICS UK Residential Survey results continue to depict a muted market backdrop at present, with new buyer demand, sales, fresh listings and prices all reported to be on a downward trend. What’s more, near-term expectations suggest this picture is likely to remain in place for a while longer as the market adjusts to the higher interest rate environment.”


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