Residential Property Review – October 2023

Conditions remain challenging

The residential sales market continues to be challenging, according to the latest UK Residential Survey by the Royal Institution of Chartered Surveyors (RICS), with demand, sales, instructions, and prices remaining in negative territory.

At a national level, new buyer enquiries recorded a
net balance of -39% in September, which, although weak, is marginally less negative than the previous month’s reading of -46%.

The listing headline net balance was -17% in September (compared to -26% in August). Agreed sales remain firmly negative, with a national net balance of -37%, but this reading is less downcast than readings of -46% and -45% seen in August and July, respectively.

Looking at twelve-month sales expectations, the outlook is more positive, with a net balance of +3% (up from -5% last time) signalling a much more stable trend in sales volumes emerging over the year ahead.

Rental properties receive 25 tenant enquiries

Over the last two years, average rental prices have continued to rise, and there have been more people looking to rent homes than there have been properties available.

According to Rightmove, the number of tenants looking to move now, compared to 2019, has increased by more than 40%, while the number of available homes to rent has dropped by 35%. Because of this mismatch, letting agents are receiving an average of 25 enquiries from prospective tenants for every home available to rent. This has risen from eight enquiries per property in 2019 and is five more than in May of this year.

Rightmove’s Tim Bannister commented, “The number of new rental properties coming to the market is now at its highest level since the end of last year. While it is likely that there is some way to go before this filters through to rental prices, if the improving trend between supply and demand continues, we could start to see the pace of yearly rent rises slow more significantly than it has been.”

BoE concerns over longer mortgage terms

Consumers are taking out longer mortgages to cope with higher interest rates and living costs, potentially storing up debt troubles in future, the Bank of England (BoE) has said.

According to the central bank’s Financial Policy Committee (FPC), the proportion of mortgages lasting 35 years or more has increased from 4% in the first three months of the year to 12% in the second quarter. The FPC said that longer mortgages account for a small share of total mortgages and “Such lending will be bound by Financial Conduct Authority responsible lending rules requiring lenders to take account of future changes to income and expenditure, such as the borrower retiring, where that is expected to happen during the mortgage term.”

The UK has a relatively short-term mortgage market compared with some countries, including USA, where the average mortgage term is 23.3 years.

House Prices

Headline statistics

House Price Index (Aug 23)152.6
Average House Price£291,000
Monthly Change0.3%
Annual Change0.2%
  • Average house prices in the UK increased by 0.2% in the year to August 2023
  • On a non-seasonally adjusted basis, average UK house prices increased by 0.3% between July 2023 and August 2023
  • The average price in London was £536,000

Price Change by Region

RegionMonthly ChangeAnnual ChangeAverage Price
England0.2%0.0%£310,000
Northern Ireland1.4%2.7%£174,000
Scotland1.2%1.1%£194,000
Wales-0.1%-0.1%£217,000
East Midlands0.6%0.5%£251,000
East of England-0.7%-1.6%£351,000
London-0.1%-1.4%£536,000
North East1.3%3.6%£165,000
North West0.0%0.4%£216,000
South East-0.1%-0.6%£393,000
South West1.2%-1.1%£328,000
West Midlands Region0.5%1.1%£254,000
Yorkshire0.4%2.2%£213,000

Average monthly price by property type – August 23

Property TypeAnnual Increase

Detached

£458,000

0.8%

Semi-Detached

£283,000

0.9%

Terraced

£237,000

-0.9%

Flat/Maisonette

£233,000

-0.2%

Source – The Land Registry

House market outlook

“Activity levels continue to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales. Borrowing costs are the primary factor, given the impact of higher interest rates on mortgage affordability. Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.”

Kim Kinnaird, Director, Halifax Mortgages

Contains HM Land Registry data © Crown copyright and database right 2023. This data is licensed under the Open Government Licence v3.0.

All details are correct at the time of writing (19 October 2023)

The Residential Property Review is updated each month.

View last months Property Review Here

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of
the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

As a mortgage is secured against your house it may be repossessed if you do not keep up with mortgage repayments.