Home.co.uk's Asking Price Index for January has shown that house prices continue to be supported by lower stock levels and increased expectations of lower mortgage rates as inflation falls. Annualised growth in home market values for England and Wales is currently just into the negative at -0.5%, indicating a resilient market given the headwinds of 2023 and much better than many pundits predicted.
Given the fact that the supply of new instructions remains relatively low and the worst of inflation appears to be far behind us, market participants may allow themselves some cautious optimism as we commence the new year.
While the market has slowed, it has certainly not frozen and still retains significant momentum. Current Typical Time on Market figures are consistent with pre-COVID years. Normal seasonal expectations are for large drops in marketing times in March and April. Given how mortgage rates are improving, this appears the most likely scenario.
At the regional level, Typical Time on Market figures indicate that the North of England, Scotland and Wales all continue to show large improvements over their January 2019 performance. Unsurprisingly, this correlates closely with annualised price growth in those regions which remains significantly positive.
However, in Greater London, the Midlands, the East and the Southern regions, the contrary is true. These regions have yet to regain the momentum they had in 2019. Moreover, they are also the regions where price growth remains negative year-on-year.
Following a breathtaking rally, rents are falling overall in Greater London. During the last three months asking rents in the UK's largest rental market have taken a 5.5% haircut, meaning that they are now down 2.1% year-on-year. This has been driven by a large increase in supply.
For the time being, all other regions indicate positive growth year-on-year but similar market corrections may be anticipated in other regions should supply increase significantly. The East of England and the South East are possible candidates.
UK asking rents are currently 5.0% above their January 2023 reading.
The annualised mix-adjusted average asking price growth across England and Wales is now -0.5%; in January 2023, the annualised rate of increase of home prices was 1.9%
