Nationwide Building Society (Source: www.birminghammail.co.uk)
Now that we are into our first week of 2023, lenders, estate agents, solicitors, mortgage brokers and other property professionals are starting to release data that they have collected throughout the year. 2022 was a very challenging year for property…in fact, the last 2 and a half years have been difficult with the COVID-19 pandemic and the economic crisis we find ourselves in. One of the biggest areas that has been impacted is house growth, with the value of property decreasing over the last few months after reaching record highs.
Nationwide’s Report On House Growth At The End Of 2022
One of the first lender’s to release their findings on house price growth or the lack there of, was Nationwide building society. In a message to all mortgage intermediaries this morning, Nationwide have reported that annual house price growth continued to slow sharply as 2022 came to an end. Here is a roundup of what their report shows.
Report
Gap between house growth figures (Source: https://www.nationwidehousepriceindex.co.uk/resources/jy14r-6tyv8-apof1-k5ij8-2lhzo)
House price value declined for the fourth consecutive month in December 2022 driving annual house price growth down to 2.8%. According to the report, all regions of the UK recorded a slowdown in annual price growth in the final quarter of the year. Nationwide report that East Anglia i.e. Norfolk, Suffolk & Cambridgeshire reported the highest annual price growth of 6.6%. Scotland reported the lowest annual house price growth at 3.3%. London was the weakest performing English region, with annual price growth slowing to 4.1%, from 6.7%. In November 2022 the average house price in the UK was £263,788 and in December it was reported as £262,068. Since Q1 of 2020, price growth in detached properties was around double that of flats.
UK average house price by property type (Source: https://www.nationwidehousepriceindex.co.uk/reports)
Nationwide’s Reaction To The Report
Chief economist at Nationwide Robert Gardner released an in depth analysis of the data along with the report, here are some of his main observations:
“December saw a further sharp slowdown in annual house price growth to 2.8%, from 4.4% in November. Prices fell by 0.1% month-on-month – a much smaller decline than in the previous couple of months. However, December also marked the fourth consecutive monthly price fall – the worst run since 2008, which left prices 2.5% lower than their August peak (after taking account of seasonal effects).
While financial market conditions have settled, mortgage rates are taking longer to normalise and activity in the housing market has shown few signs of recovery. It will be hard for the market to regain much momentum in the near term as economic headwinds strengthen, with real earnings set to fall further and the labour market widely projected to weaken as the economy shrinks.
Good News Or Bad News?
There are different ways of looking at this data from a property professional standpoint. In a time of economic turbulence, it was expected that property prices would come down. How does the old saying go? What goes up must come down? Well that is exactly what is happening to properties and would probably have happened anyway just because house prices were getting too high for people to afford.
Of course people who own properties already and are thinking of selling will be worried about the value of their property and the saleability of it. But although property value is decreasing, the changes are not astronomical and as the market stabilises over the next couple of years, this will slow and property prices will more than likely increase again due to renewed interest in buying.
For those looking to buy a property, this drop in property prices could be a blessing in disguise as you may soon be able to pick up a property at a discount that you wouldn’t have been able to afford previously. However, this does not guarantee that you will be able to get a mortgage on the property you are wanting to purchase. Getting a mortgage has become more and more tricky over the last few months and lenders have increase affordability stress tests, deposit requirements and of course interest rates. A property price drop of £5K, £10K, £15K, £20K might sound incredible but if the monthly payments are too high for your because of the interest rate you may struggle to get the lending that you require.
What Can I Do If I Own
The best thing to do if you are either looking to sell a property and move in the next few months or are looking to buy a new property would be to discuss things with a mortgage broker and an estate agent. An estate agent will be able to talk you through the current property market in your area and what they think your property will be worth. Your mortgage advisor will be able to let you know what exactly you can afford and the best way of doing it. We at Oportfolio can offer you expert mortgage advice and can recommend local expert estate agents. Give us a call today if you have anything you want to discuss. We are here to help.
