House prices increased 4.1% in the 12 months to March 2023, meaning £11,000 of value was added to the typical home, with the average price of a property stood at £285,000.
However, on a monthly basis, prices have fallen for the fourth consecutive time, decreasing 1.2% in March 2023, following a slight drop of 0.1% in February 2023.
The annual rate of growth also slowed, down from 5.8% in the year to February 2023, according to data from the Office for National Statistics.
It is also a sharp fall in annual growth compared to the recent peak in July 2022, when house prices increased 14.3% over the year.
Experts said what happens next to property prices would be influenced by what happens to the rate of inflation, which has a major impact on how much interest households pay on their mortgages.
Yesterday, it was announced that CPI inflation fell from 10.1% to 8.7%, but not enough to stop analysts predicting a further hike in interest rates by the Bank of England.
Jeremy Leaf, north London estate agent, said: “This most comprehensive of all the housing market surveys confirms what we have seen elsewhere, even though these figures are a little dated.
“Prices are up a bit or down a bit with no significant changes expected over the next few months. Buyers and sellers are finally shrugging off the worst effects of last September’s mini-Budget, with the market in a better place than it was at the end of last year.
“Confidence is slowly returning, particularly as inflation is beginning to fall and expectations grow that interest rates are at or near their peak.’
Jason Tebb, CEO of OnTheMarket, commented: “These numbers are a little historic but show the continued, gentle slowdown in annual price growth in March.
“Continuing economic uncertainty is bound to have an impact on confidence as there are fears that while inflation is falling, it’s proving to be more stubborn than anticipated, which may require higher interest rates for longer.
“Our own data shows that a level of stability is evident in the market after the unprecedented uncertainty seen in the autumn. Although the Summer months are always the best time to market a home, challenges still remain with buyer affordability, so accurate pricing is essential if sellers wish to achieve a successful and timely outcome.”
Jean Jameson, chief sales officer at Foxtons, said: “The London housing market appears to be facing a better 2023 than initially predicted as renewed confidence ignites demand from buyers and investors.
“Our local offices are seeing increasing appetite for London homes, with 17% more viewings booked year on year in April. This could be due to innovative products, such as Skipton Building Society’s “no-deposit mortgage”, which has enticed buyers to explore their options; or the steadying of mortgage rates supporting greater price alignment between buyers and sellers.”
Nigel Bishop, founder of Recoco Property Search, remarked: “Demand for properties across the UK’s home counties remained extremely high throughout the first three months of this year but doesn’t compare to the spike in buyer enquiries that the market has seen during the pandemic. The volume of enquiries received this March has actually been en par with the corresponding month of 2018 and 2019 which indicates a more balanced market outlook.
“Where there have been motivated sellers, we have been able to negotiate a reduction in the asking price and we are expecting more sellers to be open to price negotiations over the next few months. Therefore, we advise house hunters to be mindful when making an offer.”
Iain McKenzie, CEO of The Guild of Property Professionals, said: “House prices are still holding steady despite the financial challenges faced by many households. This will be welcome news to sellers who might have expected worse news in the first half of the year.
“There has been a slight drop compared to last month, but as there are now more properties on the market than this time last year, we are seeing sellers being more flexible on the asking price.
“We saw today that inflation is finally coming down. This should help reassure prospective buyers that they will be able to afford their mortgage repayments and that confidence in the market will keep house prices robust.
“Getting inflation under control has come at the cost of higher interest rates, which in turn impacts on mortgage availability. If this improves, we may see more competitive offers being put on the table by lenders and this too will get more people on the property ladder.
“If you are considering selling your home, now is a good time to contact your local estate agent and ask about market conditions in your area. Rental prices are sky-high, which means first-time buyers are still better off owning their home if they can afford to.”
Nick Leeming, chairman of Jackson-Stops, said: “Despite a modest start to the year with the latest ONS stats on property prices showing a slight dip in March, more recent statistics in May from Rightmove paints a picture of marginal growth. Taking both into consideration, it is looking more likely that we will see house prices remain broadly stable in the months ahead, with parts of the market well placed for green shoots as we head into summer.
“The UK now avoiding a recession combined with a wider acceptance of current mortgage rates as the new normal, as well as low supply in some parts of the country, has allowed the market to show steady resilience.
“The Easter Holidays and triad of May bank holidays providing buyers with the opportunity to reignite their property searches should hopefully be reflected from next month. More broadly, buyers are benefiting from a market with more breathing room compared to just a year ago, when even a short delay could make or break a sale. The market this spring has felt more like a gentle meander, rather than a race to the finish line.
“For family buyers, the property market is at an optimum point in the year. The spring bounce has seen more properties enter the market after a lean start, with the school holiday window seeing a wave of sales agreed across our national network of branches.
“Property values in the mid- to high-end market are anchored by an overall lack of supply in some of the most popular areas in the country. Many of these are older cash buyers, less dependent on lending to finance their move, and equally prioritising the house and its location over monetary barriers. This means best in class homes still attract significant competition.
“Looking ahead, the housing market remains cyclical and while we are in a more difficult economic period, the fundamentals of supply and demand often ensure that it defies gravity.”
Jonathan Hopper, CEO of Garrington Property Finders, commented: “The night is often coldest just before dawn, and this snapshot from March reveals a market still iced over by the post-Truss chill.
“March’s 1.2% drop in average property prices wasn’t just the fourth month-on-month fall in a row, it was also a sharper drop than those seen in the depths of winter.
“This latest decline has throttled back the annual pace of price growth across the board, but especially sharply in London – where the annual rate of inflation halved in the space of just a month.
“But falling or flatlining prices are piquing the interest of would-be buyers, and we’re starting to see a steady stream of buyers come out of the woodwork, fired up by settling mortgage rates and the sense that there are now some bargains to be had.
“We’re even seeing some first-time buyers, fed up with soaring rental costs, return to the market – and in many cases they are drawn to the former investment properties being offloaded by buy-to-let landlords for whom the sums no longer add up.
“Increasing levels of buyer interest are slowly pushing up the number completed sales, and in some cases leading sellers to get carried away on pricing. In many parts of the UK, this remains a buyer’s market and homes that are priced competitively are selling well; overly optimistic sellers risk seeing their home sit on the shelf as buyers feel they have both time and choice on their side.
“As this tension eases and the market finds its new equilibrium, prices are likely to meander in the second half of the year.
“While prices always hog the headlines, the most positive trend is in transaction volumes. The number of homes coming onto the market and being bought is creeping back up and the market is slowly becoming more free-flowing.
“The price reset has been hard but the market is rebooting.”
Alex Lyle, director of Antony Roberts, said: “Much depends on what type of property you are interested in buying in terms of what prices are doing – there is little differential in house prices compared to this time last year while flats are compromised and struggling to achieve the prices they could have done a year ago.
“Stock levels are up on this time last year and the majority of houses in the £1.5m-plus bracket are going under offer within three weeks of marketing. However, we have never known transactions take so long to progress from agreed to exchange as many solicitors find themselves at capacity.
“Demand from new buyers is down slightly year-on-year although over the past couple of months we have seen an uptick in enquiries as the weather improves and properties appear at their best.”