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Land Registry HPI - May 23

ended 18. July 2023

Tomorrow morning at 09:30, we're getting the May Land Registry house price data, which is based on completed sales as opposed to all that asking price nonsense. As ever, it's a chance to talk all things property so a few Qs:

  • What's your verdict on the UK residential property market during the second half of the year? 
  • What will be the main drivers of house prices during the next 6-12 months?
  • Some are predicting house price falls of as much as 25%. Do you agree or will the lack of supply prevent that?
  • If mortgage rates continue to rise, will we see a flood of properties coming onto the market as a result of forced sales?

Any other thoughts or insights regarding the state of the property market, wing them across.

8 responses from the Newspage community

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Russell Maggs
Mortgage & Protection Adviser at Maggs Financial Services
Annual house price growth continues to edge down, which is unsurprising given the rate rises we have had. Average values are likely to continue to fall given the current level of mortgage rates. Despite Wednesday's positive inflation data, we could still see the Bank of England increase rates again, which will further impact sentiment. Buyers need the time to get used to the higher interest rates we now have. However, the lack of supply should ensure property values don't plummet as some have predicted. As people's mortgages increase, the knock-on effect will be felt by borrowers with unsecured credit, who may find it more difficult to renegotiate 0% credit card deals and struggle with other payments while prioritising keeping the roof over their heads.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Land Registry data is one of the best barometers for transactional data as it includes cash sales, which lender indices fail to capture. The second half of this year may see a slight reduction in property listings but with demand for housing some 48% stronger than pre-pandemic levels, more people will be slogging it out for fewer properties, which will support prices. There will be many stuck on legacy variable rates with zero mortgage options who will decide to throw in the towel and market their property, however, this is a relatively small group. I doubt there will be a property crash. Expect seasonal variations, and people under pressure to sell cutting prices for speed and ease but other than that, I would expect the market to flat line. Those who have been subjected to increased mortgage interest are making the necessary adjustments to their overall expenditures, and selling their homes just because it costs more is far from the forefront of their minds.
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Riz Malik
Independent Financial Adviser at R3 Wealth
The primary catalyst to revive the UK housing market would be either a reduction in interest rates or a decrease in prices with the later more likely in the short term. Trust has significantly eroded and without a decrease in current rates, it will necessitate price reductions to encourage people to take action. However, the moratorium on repossessions as stated in the mortgage charter is expected to prevent a precipitous drop for at least the next year. This is because properties that would have previously been repossessed will not come onto the market. Just as with the economy, the UK property market is likely to remain in a state of stagnation.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
House prices are falling, we can all see that, but what is uncertain is how low will they go. With the majority of mortgaged homeowners yet to feel the effects of sky high interest rates, as they are on fixed rates, it might be some time before more significant falls are seen. The only thing to soften this reality is for the Bank of England to reverse course and there are no signs of this. Expect falls of up to 25% over the next 18 months.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The UK residential property market will see a much-needed price correction during the second half of the year. This data is just the start. With lots of properties coming to market and fewer buyers able to afford them due to mortgage rates and other cost-of-living pressures, it is now very much a buyers' market, with plenty of properties to choose from, and those most keen to sell are likely to reduce their asking price to secure a buyer kick-starting the adjustment. I do not believe it will be as drastic as the 25% price fall some have suggested, as there is still an overall shortage of properties in the UK despite the increased numbers coming to market, following many successive years of not building enough houses. As more and more borrowers come off their low fixed deals into the new rate reality, there will be many keen to sell and downsize to help reduce their outgoings and stay afloat.
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Stuart Crispe
Founder at Sunny Avenue
Given all the rate rises we have had over the past year, downward pressure on house prices was inevitable. Even following Wednesday's better than expected inflation data, inflation needs to drop further and the base rate to stabilise or come down before the property market once again starts to rebound. We could see a rise in the number buy-to-let investors leaving the market, alongside those who cannot afford to keep their home. Though the lack of supply will likely prevent a collapse in prices, the increased volume of buy to let properties coming onto the market and forced sales will clearly put further downward pressure on prices.
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Graham Cox
Director at Bridging Hub
It seems likely we'll see house price falls accelerate towards the end of 2023, as the effects of the recent mortgage rate turbulence shows up in the Land Registry figures. Burdened by ever-greater borrowing costs, increasing numbers of homeowners and landlords will list their properties for sale, at the same time as buyer demand is drying up. With increased competition, vendors will have no choice but to price-cut aggressively to sell. Expect big price falls over the next year in particular.
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Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
Typical seasonality alongside current uncertainty and rate volatility means the volume of property transactions will almost certainly be down for the remainder of 2023 but sentiment significantly influences market performance, and scaremongering about house price crashes may well perpetuate itself if unopposed. The actual situation in the UK housing market suggests that the imbalance between supply and demand will likely lead to only a moderate softening of prices in the second half of 2023 rather than any significant level of house price armageddon. A moderate national decline of 5%-10% in house prices was widely predicted at the start of the year by many and broadly these forecasts seem to be where things are heading. In Scotland, signs of a slowdown in some areas can be found but Home Report values are typically still being achieved and supply remains limited so apocalyptic predictions of 25% price drops appear ludicrous with a flat second half of 2023 more likely.