House prices in the UK rose by just £14 between January and February. This makes it the smallest-ever month of growth for asking prices of homes in the UK since records began in 2001.
According to data released by UK real estate company Rightmove, the average asking price for a home is now £362,452.
January is traditionally a month where asking prices start to rise as the Spring selling season kicks in. However, the latest data suggests a minimal increase, effectively zero in percentage terms, means that sellers are being more realistic with their asking prices as the UK housing market cools rapidly.
Until last month, house prices had fallen consecutively for almost half a year. Meanwhile, annual house price growth n the UK slowed to 1.1% in January, down from the 2.8% recorded in December.
Tim Bannister, Rightmove’s director of property science, commented on the latest data:
“This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint.”
UK Housing Market Bleak Future
The latest data posts a bleak picture, but the future doesn’t look much better.
The Office for Budget Responsibility, the government’s official forecaster, has predicted a 9% decline in UK house prices through to Autumn 2024. Only then, they say, will house prices start to rise again.
Rising interest rates continue to hinder economic growth and house prices in the UK. Since December 2021, there has been a sharp rise in interest rates. The Bank of England raised interest rates by half a percent to 4% earlier this month in a bid to quash double-digit inflation. The markets expect further interest rate hikes, with some predicting a peak at 4.5% in June.
Meanwhile, UK estate agent Knight Frank expects house prices to drop by around 5% this year as household budgets feel the pressure of the cost of living crisis and inflation at a 40-year high.
However, there is some optimism.
Tom Bill, head of UK residential research at Knight Frank, saw some green shoots of recovery in the housing market. He said:
“Buyers and sellers switched off early for the holidays due to the volatility caused by the mini-budget but have come back surprisingly strongly in 2023.”
