Property prices go pre-pandemic

Kate Faulkner OBE looks beyond the scary headlines to describe a clearer picture of a market returning to pre-pandemic levels.

News headlines image



Prices fall as some movers wait for calmer 2023

“Average price of property coming to market drops by 2.1% this month, a bigger dip than usual at this time of year as some determined sellers price aggressively to tempt hesitant buyers. 2022 ends with new seller asking prices 5.6% higher than a year ago, versus 6.3% annual growth in 2021.”

Market turmoil as vendors quit and prices take a haircut

“Asking prices across England and Wales dropped suddenly by 2.4% during November. This fourth consecutive monthly fall brings year-on-year growth down to just 1.5%.”


Sales market activity continues to fall, now leading to a softening in house prices

“With respect to house prices, a net balance of -25% of survey participants are now seeing a fall at the national level. This is down from a reading of -2% last month and represents the weakest figure for the price growth gauge since May 2020.”


Annual house price growth continued to slow sharply as 2022 drew to a close

“Fourth consecutive monthly decline drives annual house price growth down to 2.8% in December.”


Price of average UK home fell in December

“In December, the cost of the average UK home was £281,272, a fall on the previous month of -1.5%, with annual growth slowing to +2% (from +4.6%). However, the fall in December was lower than the monthly decline of -2.4% recorded in November, even taking into account seasonal slowdown driven by the festive period.”


National price rises slow but remain positive

“House prices in England and Wales rose by 0.5% in December – the same rate as seen in November. Although this rate may not be particularly significant in the context of the movement in prices over the last two years, it remains positive, which may come as a surprise to those who are keen market watchers.”


Is the buyer ‘search for space’ over?

“UK house prices increased by 7.2% over 2022. Quarterly growth slows rapidly and is set to move negative in Q1.”

The national picture

Kate FaulknerKate says: And the scary headlines begin! ‘Sharp falls’, ‘slowdown’, you name it we’ll hear lots of miserable headlines over the next few months – but it’s important to remember that the likes of Halifax may report that prices have fallen month-on-month, but they have also reported prices are up by 2% for 2022, so it’s essential for agents and surveyors to start saying what’s happening in their area for different property types, not let these headlines frighten people into not doing a move they need.

We’ll hear a lot of miserable headlines over the next few months… but people still need to move home.

And, it’s important to remind everyone that whatever happens to the market, people still need to move home and it’s still possible. As we had unexpected house price growth last year, rather than the few per cent predicted, sellers can actually afford to sell for less year on year without really ‘losing’ anything versus prices in 2021.

For those that say but what about the people that bought last year – the answer is, why on earth would they be moving this year? And most are likely to have tied in great 2-5 year fixed rate mortgages.

Whatever happens in the property market, whether it goes up, down or stays the same, the industry’s job remains to help find a solution for people to be able to put the roof over their head they need. We’ll hear a lot of miserable headlines over the next few months… but people still need to move home.

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The regional picture

Kate says: The North East is seeing some of the largest rises, according to the Land Registry and Rightmove. While for mortgaged properties, Nationwide indicates top growth areas are the East and West Midlands. Most of the indices show London and the South East to be the lower performers, with suggesting prices have fallen year on year in the East, South East and London.

The issue will be over the coming months that as the market ‘turns’ the indices will give conflicting information. So the lagged data from the Land Registry is still showing high growth, which while historically correct (bar some exaggeration due to the change in mix of houses and flats), data from the likes of is much better at giving us an idea of what is likely to happen to prices over the coming months as practical sellers and smart agents start to price properties for a tougher market, primarily due to the realisation that mortgage rates are higher than they were pre-2021.


“Our regional house price indices for Q4 showed a marked slowdown in annual house price growth in all regions. This was most pronounced in the South West, the strongest performing region last quarter, which saw annual house price growth slow from 12.5% to 4.3%. East Anglia was the strongest performing region over the year, with average prices increasing by 6.6%. Southern England continued to see weaker growth overall than northern England. The West Midlands was the strongest performing region with prices increasing by 6.1% over the year. London remained the weakest performing English region, with annual price growth slowing to 4.1%, from 6.7% in Q3. The surrounding Outer Metropolitan and Outer South East regions saw very similar annual growth in 2022, with prices increasing by 4.2% and 4.3% respectively.”


“All nations and regions saw annual house price inflation, although the rate of growth has slowed. On an annual basis, the North East saw the greatest slowdown in growth, with annual house prices rising by +6.5%, compared to +10.5% the prior month. Eastern England, West Midlands and Wales experienced the smallest falls in growth rate. Those buying in Scotland will find an average home now costs £200,166, with the second greatest slowdown in the annual growth in the UK, now +3.5% (from +6.4% last month). Properties in Northern Ireland are up +7.1% year-on-year, lower than the +9.1% last month. The cost of an average home in London in December was £541,239, a growth of +2.9% annually, compared to +5.0% last month.”


“Price increases still evident in the North while weakening in the South. London is the region with lowest annual price growth at 1.5%. East Midlands again records top regional annual price increase at 14.1%.”


“The sharp drop in demand for housing since the summer has rapidly reversed the upward momentum in house prices. Average prices are up 7.2% year on year, an increase of £17,500. The underlying rate of quarterly price inflation has slowed quickly from over 2% up until the summer to just 0.3% in the last 3 months – an annualised growth rate of just 1.4%. We expect our index to register quarterly price falls over the first half of 2023, dragging the annual rate negative by mid-year. “It is the same pattern across all regions and countries of the UK as weaker demand from higher mortgage rates, cost-of-living pressures and low consumer confidence hits price growth across all markets. Sellers continue to accept larger discounts to asking prices to achieve sales. The gap has grown to 4% in December 2022, down from zero percent in early October. We expect discounts to widen further in 2023.

Property prices in towns and cities

Property prices - towns & cities - imageKate says: Overall, property prices in nine cities have risen above inflation since 2005, including Bristol, London and Cambridge, 19 cities are seeing price growth below inflation and one city remains on par. Even with the price growth seen during the pandemic, it doesn’t mean that they have actually kept up with inflation.

Demand and supply

Kate says: Despite all the fears and worries being spread across the industry my latest article (link when done) shows that actually, property sales are still happening and aren’t as bad, yet, as many are predicting. Of course, it could get worse, but so far, sales are still holding, despite demand falling.

How can that happen? Well if there were 20 viewings for a property and three offers, if today’s lower demand means that there are 10 viewings for a property and still one or two offers, that’s enough for people to move. This is shown in Zoopla’s latest data where demand for homes may have fallen by 50%, but new sales agreed is down by a lot less, showing the market is holding its own, for now.

But as Zoopla also shows, the devil is very much in the detail, and that agents and surveyors’ information of what is actually happening now in their local area is critical for buyers and sellers to make their property decisions in 2023.


“The sharp fall in demand in the wake of the Mini-Budget has now plateaued. Demand for homes is down 50% year-on-year, while the number of new sales agreed (i.e. sold subject to contract) is down by less (28%). This demonstrates that committed buyers remain in the market as sellers are willing to negotiate on price, hence the discount to asking prices widening.

“Most measures of market activity are on a par with the pre-pandemic years of 2017-19. Some are referring to this as a return to normal market conditions. However, these were decidedly average years as political turmoil over Brexit and concerns over the economic outlook weighed heavily on market activity and consumer sentiment.”

“A key trend over the last two years has been the ‘search for space’ with a proportion of buyers looking to relocate to rural and coastal areas, pushing up demand and pricing more quickly than in other areas. Some of the largest gains in house prices over the last year have been across Wales, the South-West, Norfolk and East Kent. Our data on the relative changes in demand and sales show this trend is reversing and set to continue over 2023. Coastal towns in the south of England – East Kent, Torquay and Portsmouth – as well as the wider Lake District area (the Lancaster postal area) and mid-Wales (the Shrewsbury postal area) have all recorded a greater slowdown in demand and sales over 2022 than other areas. These markets are all slowing off a high base of activity. The initial wave of pent-up demand brought about by more working from home and a spike in retirement, looks to have run its course for now with less value for money and fewer purely discretionary motivated moves.”

“Buyer interest remains stronger in more urban settings where jobs are being created and there are more services. Family housing in city suburbs and commuter areas have registered above-average demand over the last year while demand in city centres has been weaker.

NAEA Propertymark

“The average number of properties available to buy per member branch rose slightly to 33 in November. This compares to a pre-pandemic average for November of 38 (2015–2019). The average number of sales agreed per member branch dropped to six in November – down from 10 in September.”


“In general, transactions by each property type tend to move in similar directions to each other, with peaks and troughs tending to occur in the same months. On closer examination, it can be seen that during 2019 and the first three months of 2022, the ranking in sales totals is headed by semidetached, followed by terraces, detached and finally flats. However, from October 2021 onward the rankings change, with terraces outnumbering semi-detached sales, and the number of detached sales being visibly smaller than semi-detached during this latter period. Meanwhile, flats continue to trail the other three property types.”

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Kate says: According to HMRC data, sales over 2020 and 2021 were incredibly erratic, making it super hard for the industry to move people smoothly, especially as we can’t magic more mortgage advisors, legal and surveying experts, agents or removers.

Everyone expected 2022 to be much calmer and although transactions were still consistent, volumes are still expected to beat the annual average sales of 1.2mn. This means we have sold a lot more homes over the last few years, so the fact that transactions are expected to be lower this year is not just due to an economic recession, but also always likely to have happened.

Predictions for 2023

Kate says: As I’ve said before, this is a tough call to make. Some think prices will fall by 20% as per other recessions, others, including me, are in a camp that believes equity levels and tighter mortgage restrictions will lead to less impact – so are predicting more 5-10% falls. The reality is though, the impact of this recession will be very specific to an area, the road it’s on, the property type and individual supply and demand for specific properties. It’s likely to take until Easter to find out who is right and who is wrong – be great to hear your thoughts!


“As we enter 2023, the housing market will continue to be impacted by the wider economic environment and, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall, with house prices forecast to fall around -8% over the course of the year. It’s important to recognise that a drop of 8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.”

“Affordability is the primary factor looking ahead to 2023 and beyond influenced by mortgage rates, household incomes and the actual level of house prices. The more unaffordable a market, the more households are priced out, weakening demand and impacting sales volumes and pricing. The impact is the greatest in high-value areas where mortgages are bigger.


“We expect house price growth to slow in these higher-growth markets in 2023. Our national view is UK house prices falling by 5% next year. Price falls in more affordable markets are likely to be below average as the hit to buying power from higher mortgage rates will be less than in the high-value markets. This is supported by evidence of continued above-average demand in more affordable urban areas.”

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