The Zoopla House Price Index shows a 0.6% annual rise in UK house prices after recent mortgage rate rises impacted demand. Let’s see what’s happening with house prices in July 2023.

Mortgage rates have rapidly increased over the past six weeks, approaching 6%, affecting both buyers and sellers in the property market.
Demand has decreased by 18% over the past two months as a result of some buyers backing out of the market due to their hesitation to take for higher rate mortgages. The supply of properties available on the market has grown as demand declines.
House prices are suffering as a result of rising mortgage rates, especially in the more costly south of England.
The average mortgage rate for a 5-year fixed rate at 75% loan to value increased to 5.4% after the Bank Rate was increased to 5% to combat persistently high inflation at the end of June.
The typical mortgage rate in the spring

Poster protesting against rising rents in London. Average rent is now more than £2,500 a month in the capital, but the rate at which has risen has slowed. Photograph: Katharine Rose/Alamy

The UK’s annual house price growth has slowed in the last month – declines are also noticeable in Southern England and Northern Ireland.

The UK’s annual house price growth has slowed to 0.6% from 1.9% last month, and there have been house price declines in 4 districts of southern England and Northern Ireland.
While there have been more properties available for sale over the past two months, buyer interest has decreased by 18%.
The region of England with the highest average home price, Southern England, is most affected by rising costs.
Here, the average annual decline in home prices is 0.6%.
The situation is better in the remaining areas, where real estate is less expensive, and housing values are rising by 1% annually. House prices in Scotland are up 2%.

We anticipate that over the second half of 2023, the gap in home price rise between the wealthier south of England and the rest of the nation will expand.
While some of the more accessible markets may not see any price drops at all this year, we anticipate continued moderate price drops throughout the higher-value areas.
The pressure of increasing mortgage rates is also being felt by first-time buyers, which is reducing demand at the bottom of the housing ladder.
More houses are being placed up for sale. Due to the increase in supply, merchants must now modify their prices to reflect what consumers, who now have more options and less competition, are willing to pay.

Is there a fall expected in 2023?

In 2023, we anticipate a drop in home values of up to 5% in the UK.  Mortgage rates, which are expected to peak this summer, will determine a lot of what occurs in the housing market for the rest of the year.

Over the past three weeks, swap rates—the rates banks pay to borrow money—have decreased by 0.6%.
Swap rates are determined by what the markets anticipate the future interest rate to be. Although it may take some time, mortgage rates may drop below 5% this autumn as a result of the decline in swap rates.

Over the course of a year, property prices would fluctuate by +/- 2% if mortgage rates returned to the previous range of 4-5%.

What are your thoughts on the current situation for the UK Housing market? Do you have some predictions for what is to come for the remainder of 2023? 

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