The property portals House Price Index predicts price falls of up to 5% in 2023

Annual house growth has decreased to 1.2% according to the latest figures released by Zoopla.

The sharp slowdown in annual growth is a pattern repeated across most regions and countries of the UK, according to the House Price Index. 

Growth is highest in Wales at +2.5%, with prices having already fallen back in Northern Ireland by -0.8% year-on-year.  

Some markets are still registering annual price increases of over 4% including Powys in Wales (4.1%), followed by Calderdale in Yorkshire (4%) and Dumfries & Galloway in Scotland (4%).  

The weakest growth rates are being recorded in the higher-value housing markets, such as in southern England and the Midlands where house prices grew the most over the pandemic.

The property portal now predicts price falls of up to 5% this year. However, it reports that early 2023 saw a pick up of sales activity as mortgage rates fell towards 4%. Meanwhile, buyers are driving a harder bargain, with 42% of sellers currently accepting 5% or more off the asking price of their homes.

“Mortgage rates falling to 4% earlier this year supported a rebound in sales and led to house prices registering small month-on-month gains,” Richard Donnell, executive director at Zoopla said. “Modest price falls will resume in the second half of 2023 as the supply of homes increases giving buyers more choice and room for negotiation on price.  

“We still expect house prices to be 5% lower over 2023 and there is a very substantial equity buffer to absorb price falls which are likely to be concentrated across southern England.”

>>See also: House sales ‘to drop 25%’ amid mortgage rate surge

Sales agreed for the first five months of 2023 are broadly in line with the last five years, but the average discount on asking prices rose to 3.8%. 

Last week the Bank of England increased the bank rate to 5%, causing mortgage rates to rise above 6%.

Zoopla predicts that buying power will be down 20% if mortgage rates remain above 6%.

It warns that the further mortgage rates increase above 5%, the more buyers will be squeezed out of the market.

Already there are 14% fewer buyers in the market over the last 4 weeks compared to a year ago. However, rates of sales agreed are running 8% above the five-year average. Zoopla said it anticipates a return to modest quarterly house price falls over the second half of this year as higher mortgage rates hit buying power alongside a higher cost-of-living.