"We expect 2023 to be characterised by a slower property market"
- Sebastian Verity, Chestertons
All regions recorded a slowdown in annual price growth in the final quarter of the year, with East Anglia the strongest performing region in 2022 and Scotland the weakest.
However, the gap between the weakest and strongest regions was the smallest since Nationwide’s regional indices began in 1974.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
“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."
Sebastian Verity, Head of Research at estate agency Chestertons explains:
“We expect 2023 to be characterised by a slower property market during which around 25% fewer properties will come onto the market and change hands compared to a ‘normal’ year. The government is actively working with mortgage lenders to avoid additional stress on borrowers so we believe the number of forced sales will be relatively small and the lack of supply, combined with the strong underlying demand for homes, will ultimately insulate the market from any dramatic falls in prices.”
Lawrence Bowles, director of research at Savills, said:
“The pace of house price falls slowed in December, with monthly falls easing back from -1.4% in November to -0.1% in December on a seasonally adjusted basis. That continued decline means average prices are now back to where they were right before March of this year.
“With the Bank of England still set to raise rates further and no sign yet of any significant reduction in mortgage rates, we’re expecting to see slower housing market activity in the mainstream markets over the next twelve months. Activity is expected to remain strongest in those parts of the market least reliant on mortgage debt: specifically in equity and cash rich prime markets, where demand is driven more by flows of equity than by changes to mortgage rates.
“Savills has forecast that the average UK house price will fall by -10% in 2023, with growth expected resume in 2024 as affordability pressures gradually ease (net +6% over 5 years). But prices will start rising again in 2024 as we see interest rates start to fall. By contrast, we expect Prime Central London values to contract by just -2% in 2023, and to rise by 13.5% between now and the end of 2027.”