Despite a minor 1.9% uptick in the average house prices for the year leading up to May, which is down from the previous month’s increase of 3.2%, experts have voiced their worries over the UK property market’s future. The average price of a house currently stands at £286,000, reflecting an increase of £6,000 from last year. However, this still falls £7,000 short of the peak price in September.

The May statistics displayed no movement in house prices between April and May. In fact, prices dipped in eight out of twelve regions and showed a 0.4% decrease after seasonal adjustments. The North East presented the lowest average house price at £159,000, while London topped the charts with a whopping £526,000.

An impressive 18.3% increase has been recorded for new build properties within the year, even though it marked a decrease from the preceding month’s 23.2% increase.

Sarah Coles, head of personal finance at Hargreaves Lansdown, offered her insights on the matter. She expressed, “The faint note of optimism in annual price rises can’t drown out the chorus of concern for the property market this summer.” Coles further expounded that the statistics may not reflect the current mortgage difficulties until the autumn season.

In her discussion of the dark cloud looming over the mortgage market, Coles mentioned the worrying rise of the average 2-year fix to 6.8%, and the five-year rate to 6.33%. She believes that such hikes could potentially exclude numerous prospective buyers and force some remortgagers to sell.

However, Coles offered a glimmer of hope, explaining, “The larger-than-expected fall in inflation, and the drop in core inflation announced today, may mean we don’t need quite as many rate rises as the market has been pricing in.” This could potentially impact fixed-rate deals and provide some relief to buyers and remortgagers.

New build properties are expected to suffer a blow due to the termination of Help to Buy equity loans. Coles warned, “When the market turns, it’s often those parts of the market that have seen the biggest growth that tend to see the biggest falls.”

Nicky Stevenson, the Managing Director at national estate agent Fine and Country, echoed similar concerns, saying, “House prices continued to rise in May compared to a year ago, although mortgage rate rises are stifling growth as it eats into what buyers can afford.”

Stevenson remains optimistic about the resilience of the housing market despite economic pressures. However, she also stressed the importance of appropriately priced properties in sustaining market interest, particularly from buyers looking for a potentially beneficial deal on their next home.

ONS House price data for May was released today: UK House Price Index: May 2023 – Office for National Statistics (ons.gov.uk)

Land registry data for May was also published: UK House Price Index: reports – GOV.UK (www.gov.uk)