Rightmove HPI Shows UK Housing Market Is Better Than Initially Forecast
Over the past year, the cost-of-living crisis has played havoc with the housing market – or has it?
The latest UK house price index from the property website Rightmove suggests that the property sector in 2023 is better than many feared in 2022. In fact, many factors have benefited buy-to-let property investors over the last 12 months.
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How Does the UK Housing Market Look in November 2023?
Heading into the last days of 2023, asking prices in the UK are 1.3% lower than 12 months ago.
A dip in prices is typical of this time of year. According to Rightmove, the average asking price for a UK property is £362,143 – 1.7% lower than in October. This indicates sellers are dropping their asking prices to find a buyer while demand is low.
With asking prices dropping slightly, property investors may find good-value properties for less than their typical market value, primarily if they focus their search on areas with strong rental yields and below-average property prices, such as Liverpool in the North West.
Rightmove’s data shows that the Liverpool average asking price over the last month was £206,308 – more than £150,000 cheaper than the national average.
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What Factors Have Affected House Price Projections?
Following the boom in the housing market during the COVID-19 Pandemic, numerous factors slowed property price growth. Firstly, the lasting economic effects of the pandemic saw a rise in inflation. Secondly, the Ukraine War exacerbated inflation further, meaning goods and oil became significantly more expensive. Thirdly, Kwasi Kwarteng’s disastrous mini-budget announcement sent the UK economy into a tailspin.
To correct inflation, the Bank of England raised interest rates 14 times in a row. In turn, this made mortgage rates more expensive, slowing property price growth and reducing activity in the market.
Following this turmoil, many experts forecast double-digit price falls.
However, Rightmove’s latest data shows remarkable fortitude in the UK housing market, suggesting that the market has once again been capable of withstanding external influences, maintaining its position as one of the more reliable ways to invest capital.
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How Did the Experts React to the Rightmove House Price Index?
Rightmove’s Tim Bannister reacted to the asking price data:
‘We’d expect to see a drop in new seller asking prices in the last couple of months of the year. However, the larger-than-usual drop this month signals that among the usual pricing seasonality, we are starting to see more new sellers heed their agents’ advice and come to market with more enticing prices to stand out from their over-optimistic competition.
‘The extremely busy market we saw throughout 2021 and into 2022 meant there was a shortage of homes for sale, with lots more people looking to move than there were homes available. But we’ve now settled into a much more even balance between supply and demand, with the number of homes listed for sale now just 1% behind the pre-pandemic 2019 average. This is creating space for buyers to spend more time searching for a home that’s right for them.’
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What Could Happen in the UK Housing Market in the Near Future?
With inflation falling substantially and interest rates no longer increasing, mortgage lenders have reduced their terms. As such, more buyers will inevitably come into the market. The data backs this notion: agreed sales are only 10% behind pre-pandemic levels – up from the 15% decline last month.
Tim Bannister continues:
‘This year has brought many new challenges for buyers, sellers and estate agents to navigate. While there have been many twists and turns, and there are still seven weeks left of the year, the data indicates that there has been more to be positive about in 2023 than many thought there would be at this time last year. The upcoming Autumn Statement on 22 November will now set the tone heading into 2024, particularly if there are any major policy announcements.’
Keep a close eye on RWinvest’s Insights as we get the latest scoop on the Autumn Statement and what that means for the UK house prices and the buy-to-let property market as we move into 2024!