February 2023 house price index released by government

The ONS House Price Index for February 2023 has been published, showing:

• On a seasonally adjusted basis, the average UK house price decreased by 0.3% in February 2023, following a decrease of 0.2% in January 2023.
• On a non-seasonally adjusted basis, the average UK house price decreased by 1.0% in February 2023, following a decrease of 0.6% in January 2023.
• Average UK house prices increased by 5.5% in the 12 months to February 2023, down from 6.5% in January 2023.
• The average UK house price was £288,000 in February 2023, which is £16,000 higher than 12 months ago, but £5,000 below the recent peak in November 2022.

Andy Sommerville, Director at Search Acumen, the property data and insight provider, comments: “We are continuing to see house prices fall as the cost of living and a new era of more expensive borrowing puts downward pressure on valuations. Figures today show inflation is falling, but unfortunately at a slower rate than had been expected, and the knock-on implication could be further rate rises when the Bank of England Monetary Policy Committee next meets.

“But, if we pencil in another interest rate rise, this will likely mean we continue to see house prices stagnate for a little longer over the months ahead before a stabilisation and recovery later in the year and into 2024 as inflation comes down more significantly. 

“The prospect of a slower return to growth after we have already seen three consecutive months of falling prices will obviously be concerning for buyers, sellers and their agents and advisors, all of whom need to find ways to cut costs to ride out the current challenges. Cutting notoriously slow transaction times by digitising manual processes is one route towards major savings that could be extremely valuable right now.

“We would advise businesses to look at where technology might improve their ability to drive transactions forward, and we would recommend that buyers and sellers factor in the digital platforms and services offered by their agents and solicitors when making decisions on who to instruct, as this could save them significant time and money throughout their transaction.”

CEO of Alliance Fund, Iain Crawford, comments: “So far this year we’ve seen a sustained appetite for new homes from the nation’s homebuyers, with new-build house prices generally moving against the wider grain of a cooling market. 

“While there may be a pause for breath following the final Help to Buy deadline, we expect the new homes sector to shift through the gears as the year progresses, helping to keep the overall market afloat in the process.”

Co-founder and CEO of Wayhome, Nigel Purves, comments: “A marginal reduction in the cost of homeownership will be warmly welcomed by those who have been firmly priced out of the market during the pandemic house price boom. 

“However, the unfortunate reality is that despite the recent drop in house prices, homeownership remains far beyond the reach of many aspirational buyers, who simply can’t afford the sky high costs associated with getting onto the property ladder.

“This issue has only worsened as the cost of borrowing has climbed in line with interest rates and we expect this additional financial pressure to further dampen market sentiment going forward.”

Jason Ferrando, CEO of easyMoney comments: “Higher interest rates have led to a more subdued level of mortgage market activity so far this year, which in turn, has caused the rate of house price appreciation to ease as the nation’s homebuyers tread more tentatively.

“We expect this air of caution to remain as the Bank of England is expected to increase interest rates for the twelfth consecutive time in a row come next month, however, the market should continue to stand firm.”

Director of Benham and Reeves, Marc von Grundherr, comments: “Higher interest rates have dampened the appetites of the nation’s homebuyers in recent months and so we’re no longer seeing the same feeding frenzy with respect to demand and supply imbalance of the market. 

“As a result, buyers simply aren’t having to offer over the odds to secure their desired property and nor are they willing to, given the higher cost of borrowing. This has caused house prices to normalise but we’re yet to see any notable reduction as sellers continue to secure a fair price in current market conditions.”

Managing Director of Barrows and Forrester, James Forrester, comments: “The housing market is incredibly diverse and while there are certainly some areas where house prices have reduced notably of late, there are many pockets where the market has gone from strength to strength with little signs of slowing. 

“Those considering a property purchase or sale would do well to ignore topline market statistics and the headlines they yield and instead focus on the performance of your local market when ascertaining just what price point to sell at, or to make an offer.”

Managing Director of House Buyer Bureau, Chris Hodgkinson, comments: “The property market has remained resolute for the large part and while house prices have softened, we certainly aren’t seeing a drastic downturn by any means. 

“However, what we are seeing is a far greater level of market instability during the transactional process itself, with buyers and sellers being subjected to a greater degree of down valuations, chain-breaks and sales collapsing.”