The latest Nationwide House Price Index for June 2023 shows that prices have remained broadly flat over the month but are down 3.5% when compared with the same month last year.

All regions except Northern Ireland recorded annual price falls in quarter 2 of this year. East Anglia was the weakest performing region with prices down by 4.7% year-on-year. London saw a 4.3% year on year decline, while the surrounding Outer Metropolitan region saw a 2.9% fall. The North West was the weakest performing region in the north, with prices down 4.1% year-on-year. Southern England (including the South West, Outer South East, Outer Metropolitan, London, and East Anglia) saw a 3.8% decline overall.

A soft landing?

Robert Gardner, Nationwide’s Chief Economist, said of the figures “A relatively soft landing is still possible, providing the broader economy performs as we (and most other forecasters) expect. Labour market conditions are expected to remain relatively robust, with the unemployment rate remaining below 5%, while income growth is projected to remain solid.  With Bank Rate likely to peak in the quarters ahead, longer term interest rates should also start to fall back. As a result, a combination of healthy rates of income growth and modest price declines should improve affordability over time, especially if mortgage rates moderate.”

Bigger discounts

According to Zoopla, more than two-fifths of sellers (42%) are accepting offers that are 5% or more below asking price. This is a near threefold increase from the 14% who did so in June 2022. Around 15% are accepting even greater discounts of more than 10% below the asking price.

Better outlook for First Time Buyers?

Falling house prices and the re-introduction of 100% mortgages have given first-time buyers (FTBs) reasons to be hopeful.

A survey¹ of 1000 first-time buyers found that 40% were optimistic about becoming homeowners, this is in line with the previous survey at the start of 2023 when 42% said they felt positive.

However, the last few weeks have seen mortgage rates rising quickly towards 6%. Some buyers are cautious about taking on higher rate mortgages and have stepped back from the market. According to Zoopla, demand has fallen by 18% in the last two months.

Commenting on the latest figures Richard Donnell, Executive Director at Zoopla said, “Higher mortgage rates have hit home buyer demand once again after a sustained improvement over the Spring as mortgage rates fell to 4%. House prices increased slightly over the last 3 months to June, but higher mortgage rates and weaker demand mean we expect a return of modest price falls in H2. Overall, we expect prices to be 5% lower by the end of the year, still 15% higher than pre-pandemic levels.”

Your home may be repossessed if you do not keep up repayments on your mortgage

¹ Moneybox