The Zoopla House Price Index has shown a 1.3% fall in UK house prices over the last six months up to May 2023.
The House Price Index measures house prices across the UK, and the latest figures reveal that over the last year, house prices have fallen by up to 2.2% in 28 local authority areas of the UK. In April this year, only nine regions in the country had seen annual house price falls. This reveals the broader effect of higher mortgage rates and the cost-of-living crisis on the property market across the UK.
House prices in the UK are no longer falling as fast as in December. This could be because buyers and sellers are gaining confidence in the market, preventing prices from falling further. Many see this slight fall as a price correction and nothing to panic about.
Currently, the demand for homes is lower than last year, and the number of properties available to purchase is higher. This mismatch is having a direct impact on the sale prices that are being achieved.
Sellers are realistic about adjusting their asking price to what buyers will pay. There is more choice in the market, and many people are constrained by mortgage rates limiting how much they can offer.
Just a year ago, house prices in the UK rose by 11%, showing the effects of higher mortgage rates and living costs on the property market since October 2022.
As well as a fall in house prices, there has also been a drop in the time it takes to sell a property. However, at Clyde Property we have noticed high demand and fast selling times in several areas, including Glasgow and Bearsden. Mortgage rates are settling at 4-5%, and this, combined with a strong labour market, also means more sales have gone through.
House prices may have fallen more recently if not for Bank of England regulations introduced in 2015. This has meant that those taking out a mortgage in the last seven years have had to pass strict affordability criteria and prove to the lender that they can afford rates to rise, taking their rate to 6-7%.
This has meant that there was a limit on how far house prices have fallen in the last 6 months because it’s as if the housing market has already been operating at a 6-7% mortgage rate.
House prices are expected to remain the same for the rest of the year if mortgage rates stay at 4-5%. However, the latest inflation data is higher than was expected by many, which could result in a further Bank Rate rise and this in turn, will increase mortgage rates.
Regional variations
Aberdeen has seen the fastest house price falls in the UK, and most areas with annual house prices fall in London. The lowest house prices are in rural areas to the East of Glasgow, including East Ayrshire, Inverclyde, West Dunbartonshire and North Ayrshire. This makes the market here much more accessible.
Clyde Property is a leading independent, multiple award-winning estate and letting agent with 30 years of experience in selling and letting property in Scotland. Just call your local Clyde Property branch today, for friendly, impartial advice on finding your next dream home.
