Interactive Investor

House price indices paint a distorted picture of a very uneven market

22nd March 2023 11:13

by Myron Jobson from interactive investor

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interactive investor comments on the latest ONS House Price Index.

Houses beside a green arrow showing house price growth 600

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Official figures show that house price inflation lost a considerable amount of momentum in January, when the reverberations from the ill-fated mini-Budget on the mortgage marketplace was still being felt.

“Things have moved on since then, and more up-to-date house price indices paint a distorted picture of a very uneven market. Property portal Rightmove said asking prices for homes rose by a monthly 0.8% in March after the weakest February in records going back to 2001 when they flatlined. Nationwide also reported a significant dip in houses in February - the biggest annual fall in house prices in over a decade - wheareas Halifax reported a 2.1% increase in the annual rate of house price growth.

“The reality is there is a collection of micro-markets at play. There are still regions where gazumping and bidding wars are rife, and the opposite is true in other parts of the nation. Estate agents have reported that a lack of supply in larger property have kept prices inflated, as the race-for-space theme continues to play out.

“The recent fall in mortgage rates, with lenders seemingly engaged in a mortgage price war, and a strong labour market, with unemployment at a near record low, has helped keep prices elevated. But the affordability crunch from rampant inflation and high mortgage rates, which in some cases are more than double what they were this time last year, has lessened demand.

“Spring, typically a busy season for the UK's property market, will provide the real acid test for the robustness of house prices.”


“While house price inflation has continued to lose momentum, rents have moved in the opposite direction – rising by 4.7% in the 12 months to February – the largest annual percentage change since records began back in 2016. Renters are increasingly feeling the brunt of tougher refinancing conditions, with many landlords opting to pass the higher mortgage costs on to tenants.

“Fast-rising rent is a growing blocker for many would-be homeowners, curtailing deposit-building efforts.”

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