February Residential Property Market Review
March 17, 2023

Our monthly property market review is intended to provide background to recent developments in property markets as well as to give an indication of how some key issues could impact in the future.

We are not responsible or authorised to provide advice on investment decisions concerning property, only for the provision of mortgage advice. We hope you will find this review to be of interest.

Housing market continues slowdown

According to the latest UKResidential Survey from the Royal Institution of Chartered Surveyors (RICS) new buyer demand, sales, fresh listings and prices are all on a downward trend.

January saw the ninth successive negative monthly reading for new buyer enquiries, with contributors to the survey in all parts of the UK reporting either a fall in demand or stagnation in enquiries. Alongside this, respondents continued to see a drop in the volume of fresh listings coming onto the sales market.

RICS report that twelve-month price expectations remain firmly negative, with a headline net balance of -40%. However, this is less downbeat than readings of -61% and -57% posted in November and December respectively.

Separate figures from the Bank of England show net borrowing of mortgage debt by individuals decreased from £4.3bn in November to £3.2bn in December and mortgage approvals dropped from 46,200 to 35,600 in the same period, the lowest since May 2020.

Energy-efficient homes hold value

Home buyers are increasingly factoring in energy costs when making homebuying decisions, resulting in energy-efficient homes outperforming other properties during the current market slowdown.

Six out of 10 estate agents said homes with high energy-efficiency ratings were holding their value, according to Zoopla. Four out of 10 said they were seeing more interest in energy-efficient homes from potential buyers.

The government’s Energy Price Guarantee has kept bills lower over the winter months but the guarantee will change in April when the average annual bill for gas and electricity is expected to jump to around £3,000.

If you’re selling or renting a property, it’s a legal requirement to have an up-todate EPC rating. A is the most efficient EPC rating and G is the least efficient. While 80% of new-build homes have an EPC rating of A or B, only 3% of older properties have a rating this high.

Cost of renting soared in 2022

Research by Zoopla has found that rent increases in 2022 were at their highest level for the last decade. In December, the UK average rent was £1,118 per month which is 11.5% or £120 higher than a year previously.

The average monthly rent in London was £1,976 and the capital also saw the highest rent increase in the UK with annual growth of 16.1%. Rents also soared in other major cities such as Manchester (£977 per month and 14.8%), Glasgow (£844 per month and 13.1%) and Edinburgh (£1,130 per month and 12.7%).

The soaring cost of renting has caused many tenants to move to cheaper regions. In particular, London tenants have been leaving the capital in record numbers. Hamptons Lettings Index found that 40% of renters moving home in London last year chose to leave the capital, up from just 28% a decade ago. This equated to 90,370 households, with the numbers doubling since 2012. Hamptons expect the number of renters leaving the capital to continue rising for the foreseeable future.

House prices: Headline statistics

House Price Index (Dec 2022)154.4
Average House Price£294,329
Monthly Change-0.4%
Annual Change9.8%

*(Jan 2015 = 100)

Average house prices in the UK increased by 9.8% in the year to December 2022
On a non-seasonally adjusted basis, average UK house prices decreased by 0.4% between November and December 2022
House price growth was strongest in the East Midlands where prices increased by 12.3% in the year to December 2022
Source: The Land Registry
Release date: 15/02/23
Next data release: 22/03/23

Average monthly price by property type – December 2022

Property TypeAnnual
Detached £463,10810.5%
Semi-detached £286,41311.2%
Terraced £241,1479.7%
Flat / maisonette £233,4006.4%
Source: The Land Registry
Release date: 15/02/23

House prices: Price change by region

RegionMonthly change (%)change (%)Average price (£)
Northern Ireland (Quarter 4 - 2022)-0.5%10.2%£175,234
East Midlands0.5%12.3%£256,159
East of England-0.8%9.9%£363,779
North East-0.5%11.7%£163,731
North West-0.1%12.2%£221,101
South East0.4%10.1%£404,229
South West-1.8%8.9%£330,601
West Midlands Region0.0%10.7%£256,206
Yorkshire and The Humber0.6%11.8%£214,773
Source: The Land Registry
Release date: 15/02/22
Next data release: 22/03/23

Housing market outlook

“We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years. As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand. For those looking to get on or up the housing ladder, confidence may improve beyond the near-term. Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home buying affordability over time.”

Kim Kinnaird, Director at Halifax Mortgages
Source: Halifax January 2023

Important Information
All details are correct at the time of writing (16 February 2022).

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

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.

Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 24/02/23.


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