Annual home price growth has slowed, but rental prices have risen at their fastest rate since records began in 2016, according to official figures.
The Office for National Statistics (ONS) said average UK house prices rose 6.3% in the 12 months to January 2023, down from 9.3% in December 2022.
The median home price in the UK was £290,000 in January 2023, which is £17,000 higher than it was 12 months ago.
Meanwhile, prices for private rents paid by tenants in the UK increased by 4.7% in the twelve months to February 2023, according to the Office for National Statistics.
This represents the largest annual percentage change since comparable UK records began in January 2016.
Private rental prices in London rose 4.6% in the 12 months to February 2023, accelerating from a 4.3% rise in the 12 months to January 2023.
This was the strongest annual percentage change in London since January 2013.
Amy North, head of housing market indicators at the Office for National Statistics, said: “Annual house price inflation, which is measured using final transaction prices, slowed again in January and is flat across all countries and regions.
UK rental prices have continued to climb, with the strongest growth since records began in 2016.
“London’s rents have continued to rise sharply, with the highest annual rate of increase in more than a decade.”
The average house price in the UK recorded a monthly decline of 0.6% in January 2023, following a decline of 0.4% in December 2022.
The median home price in Scotland increased by 1.0% over the 12 months to January 2023. The median home price in Scotland was £185,000 in January 2023.
The Office for National Statistics said annual house price inflation in Scotland has generally slowed since its last peak of 13.8% in the 12 months to April 2022.
The typical home price in Wales increased by 5.8% in the 12 months to January 2023. The median home price in Wales in January 2023 was £217,000.
In England, the average property value increased by 6.9% in the 12 months to January 2023. The median house price in England was £310,000 in January 2023.
Within England, the North East had the highest annual house price inflation rate in January 2023, at 10.0%, while London had the lowest, at 3.2%.
London has the highest median home price in England, at £534,000, while the North East has the lowest at £163,000.
And in Northern Ireland, the average house price has increased by 10.2% annually, with the average house price there being £175,000.
Nicki Stephenson, managing director at estate agents Vine & Country Group, said: “A large proportion of the sales completed at the start of the year have had to weather the impact of a flattened fall budget and a sudden spike in mortgage rates, and many buyers will be renegotiating the rate as a result of the change in prices. affordability.”
Tom Bell, Head of UK Residential Research at Knight Frank, said: “The drop in annual house price growth in January tells us a lot about the damaging impact of the micro budget but very little about how the UK property market has fared this year.
“After effectively stalling the fourth quarter of 2022, demand and supply have been strong this year and sales volumes will eventually catch up with an economic backdrop proving stronger than expected.”
Carl Howard, CEO of Andrews Estate Agents Group, said: “The current mismatch between population growth and home construction continues to drive demand for rental properties, particularly in cities and commuter hubs.
“The other big factor is the increasing pressure on landlords, who are affected by the rising cost of living and increasing mortgage rates.”
James Forrester, managing director of estate agents Barrows and Forrester, said: “The real estate market has started a lot in 2023 in full swing, and we’ve seen a strong level of buyer activity, with homes continuing to sell, albeit at a very marginal price.”
Jeremy Leaf, a north London estate agent, said: “The reasons for moving have not gone away as buyers are slowly returning, encouraged by lower mortgage rates.
“Although the number of views is higher, sales conversions are harder because of the greater choice and greater buyer caution.”
“The problem with the housing market right now is that buyers think it’s 2008 and sellers think it’s 2020. They’re both wrong,” said Mike Staton, principal at Mansfield Mortgage Broker Statton Mortgage.
“While market conditions are more challenging, as we head into spring and what is traditionally a busier time of year for the market, real estate must be priced correctly in order for a successful outcome,” said Jason Tepp, CEO of real estate search site OnTheMarket.com.
Andrew Montlake, managing director of Coreco Mortgage Brokers, said: “The real estate market has always been more robust than many people assume, with demand still strong while supply still far from where it should be.
“Flat lines are now the most likely scenario for house prices and prices will vary as localization becomes more visible.”
Emily Williams, director of residential research at Savills Estate Agents, said: “Savills expects areas furthest from London, cash-rich markets and equity markets least dependent on borrowing, to be the strongest performers over the next five years.”
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