Prices fall as some movers wait for calmer 2023
National average asking price Month Avg. asking price Monthly change Annual change Index December 2022 £359,137 -2.1% +5.6% 277.7 November 2022 £366,999 -1.1% +7.2% 283.7 House Price Index
• Average price of property coming to market drops by 2.1% (-£7,862) 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
• Rightmove forecasts that prices will drop by an overall average of 2% next year as a multi-speed hyper-local market emerges, with some locations, property types and sectors faring much better than others
• The number of views of homes for sale on Rightmove is up 11% compared to this time last year, a sign that there are many potential movers who are monitoring the market in detail and weighing up their options:
• As mortgage rates settle down, buyer demand over the past two weeks is 4% up on the same period in 2019
• We predict that the market will settle into a more normal pre-pandemic level of activity as 2023 progresses
The average asking price of newly listed property drops by 2.1% this month (-£7,862) to £359,137. This is a bigger dip in new asking prices than is usual at this time of year, as sellers who are determined to find a buyer quickly adjust their expectations and adapt to a less frenzied housing market. This means that at the end of 2022, average asking prices are 5.6% higher than at this time a year ago, only slightly below the 6.3% growth recorded in 2021.
Though we would always expect prices to drop in December, as motivated sellers try to capture the attention of a buyer before Christmas with a competitive price, this monthly dip is the largest we’ve seen for four years. It‘s an understandable short-term reaction to the economic turmoil and unexpectedly rapid mortgage rate rises and reduction in availability of mortgage products that we saw in late September and October, before things began to settle down. Despite this we end the year with average asking price growth of 5.6%, which is only slightly lower than the 6.3% last year. However, over the past two weeks the number of people enquiring to estate agents is up 4% on the same period in 2019, and there are also signs that some discretionary buyers, who are still able to move, are using the space between now and the New Year to weigh up their options. Before sending an enquiry, future buyers need to consider what they could purchase, and the number of views of homes for sale on Rightmove is up 11% on last year. This indicates that there are many ready-to-go buyers, monitoring and waiting for a calmer market in 2023 after an uncertain last few months of the year.
It’s understandable that some buyers are distracted, not only by the festive season, but also by the thought that they may get a better fixed-rate mortgage deal and a more stable outlook by waiting until the new year. Our data suggests that there are many ready-to-go movers out there waiting for what they feel to be the right time to enter the market in 2023. We’d usually see a jump in home-mover activity in January, but it takes a while at the start of the year for any significant price changes to feed through, so we’ll be waiting for a potential bounce back in prices in February, which will be a very important leading indicator for the spring moving season. However, affordability constraints will bite in some segments and sectors of the market much more than others which makes a national average price prediction for new to the market properties more difficult than usual this year. This will lead to a more pronounced hyper-local market, where one side of a city, town or even street could fare better than another, depending on the types of property available and the desirability and affordability of the exact location. In this multi-speed market, working with a good, local estate agent who knows every corner of the area will be vital for both buyers and sellers. After many months of having to act extremely quickly, there will be less urgency in the market as buyers wait for the right home to become available for their needs, and some sellers will hold out hoping for a price that matches their expectations. We could therefore see a stand-off in the early months of 2023 between some sellers who are in no rush to drop their prices, and those affordability-strapped or hesitant buyers. This will lead to homes taking longer to sell, and we could see a return to the more normal time to find a buyer of around 60 days.
The first-time buyer monthly mortgage payment is based on Bank of England data of the averages for 90% LTV twoyear fixed mortgages from lenders, and the average asking price of a typical first-time buyer home (two bedrooms or fewer) using the Rightmove House Price Index. The equivalent monthly rent is calculated using the same property types (two bedrooms or fewer). The affordability to buy a first home is based on the Average Weekly Earnings (AWE) dataset from ONS multiplied by 4.5 to get the typical maximum that a person can borrow from a lender. The average asking price of a typical first-time buyer home is taken from the Rightmove House Price Index.
Borough data is based on a three-month rolling average and can be used as an indicator of overall price trends in each borough over time. It is not directly comparable with the overall London monthly figures.