House Price Index - April 2023
“The worst of the pricing adjustment in the housing market appears to be behind us. House price growth will slow further over 2023 and dip into negative territory. More important is that transaction volumes continue to grow. ”
Our leading indicators of housing market activity and pricing show a steady and sustained recovery in demand and continued growth in the number of new sales agreed. House price inflation continues to slow but a major price re-correction remains a very low probability.
Demand for homes reached its highest level this year after the Easter break and is 14% higher than 2019 levels but still 42% down on this time last year. The stock of homes for sale continues to expand and is now 66% higher than a year ago. Greater availability of homes for sale is boosting choice and the number of new sales being agreed is 6% up on 2019 but in line with the 5-year average. The market remains on track for 500,000 sales in H1 2023.
The number of new sales agreed is strongest in Scotland, the North East and London. This reflects more attractive affordability levels in the former areas and with London having recorded weak price inflation over the last 6 years which has improved affordability.
Executive summary
Annual house price growth slows but the worst of the month-on-month price falls are now behind us
Demand continues to recover as the number of new sales grows
First-time buyers (FTBs) were the largest buyer group in 2022 and look set to be a strong source of new sales again in 2023
Three-bed homes remain the most in-demand property for FTBs (40%) but there is a clear shift in FTB demand towards two-bed flats
Income to buy a three-bed FTB home has increased by £7,350 since 2020 but this varies by geography
The housing market is more balanced than for some years and sales could exceed 1m over 2023 if current trends continue.
