Mixed signals in mortgage and housing markets
Inflation hasn’t been falling as quickly as anticipated, resulting in the Bank of England coming under pressure to raise Bank Rate again in May. While lenders had priced in some interest rate rises in advance, the market reaction to inflation data released in May suggests that tolerance had been exceeded and mortgage rates reversed their downward trend.
Some lenders also pulled many of their mortgage products to reprice them. According to Savills, the number of first-time buyer (FTB) products available at the start of June was 4.4% lower than a week earlier. This is significant, but a very different picture to the 50% fall in products in the week after the mini-budget last September.
The Royal Institution of Chartered Surveyors (RICS) reported positive news that new instructions rose by a net balance of +14% of survey participants during May, breaking a run of thirteen successive negative monthly readings and representing the strongest reading for the new listings metric since March 2021.
Fewer would-be tenants fly the nest
According to new research by Hamptons, young adults are staying at home for longer to save up for their own property, with some skipping the rental market entirely and going on to buy a home instead.
The number of tenants leaving the family home has been steadily declining across the UK since 2015 when 6.1% of tenants were first-timers – equating to 71,860 newly rented households in England. However, due to rising rental costs and the cost-of living pressures, in the first five months of 2023 that figure has fallen to 4.6% – or 43,280 new rented households in England.
Interestingly, London bucks this trend. Despite double-digit rental growth, the share of renters who have left the family home to rent in the capital has risen from 2.5% in 2022 to 3.2% so far this year. This reflects how more young adults, many of whom moved home to be with their families during the pandemic, are now moving back to the capital for work.
Latest news for FTBs
The average deposit paid by a UK first-time buyer for a three-bed home costing £240,000 is £34,500, assuming a 15% deposit, Zoopla has found. But the amount you need to save varies according to where you live in the UK and of course, the level of deposit you wish to pay.
Unsurprisingly, London is at the most expensive end of the market, where the average first home costs £425,000. And, according to UK Finance, the average first-time buyer will pay a 34% deposit to secure it – amounting to £144,500.
Rightmove has revealed the cheapest cities for FTBs, which is topped by Bradford, where the average asking price for a FTB property is £104,643. Making up the top five are Carlisle, Aberdeen, Hull and Dundee.
House prices headline statistics
| House Price Index – (April 2023)* | 150.3 |
| Average House Price | £286,489 |
| Monthly Change | 0.5% |
| Annual Change | 3.5% |
*(Jan 2015 = 100)
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- Average house prices in the UK increased by 3.5% in the year to April 2023
- On a non-seasonally adjusted basis, average UK house prices decreased by 0.5% between March 2023 and April 2023
- The average price in London was £533,687.
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House prices –Prices change by region
| Region | Monthly change (%) | Annual change (%) | Average price (£) |
| England | 0.5 | 3.7 | £305,731 |
| Northern Ireland (Quarter 1 – 2023) | -1.8 | 5 | £172,005 |
| Scotland | 1.3 | 2 | £187,150 |
| Wales | -1.3 | 2 | £212,834 |
| East Midlands | 0.3 | 4.6 | £247,634 |
| East of England | -0.4 | 3.1 | £351,468 |
| London | 2.1 | 2.4 | £533,687 |
| North East | 1.8 | 5.5 | £159,900 |
| North West | 0.7 | 4.8 | £212,814 |
| South East | -0.5 | 3.5 | £391,766 |
| South West | 0.2 | 4 | £327,144 |
| West Midlands Region | 0.8 | 3.1 | £246,144 |
| Yorkshire and The Humber | 1 | 4 | £205,523 |
Source: The Land Registry
Release date: 21/06/23
Next data release: 19/07/23
Average monthly price by property type
January 2023
| Property Type | Annual Increase | |
| Detached | £453,771 | 4.2% |
| Semi-detached | £278,729 | 4.5% |
| Terraced | £231,525 | 2.1% |
| Flat / maisonette | £229,752 | 2.7% |
Source: The Land Registry
Release date: 21/06/23
Housing market outlook
“The combination of high interest rates and inflation continues to be a heady mix, prompting buyers to remain hesitant. However, professional investors and landlords may find this an optimal time to add to their property portfolio, making the most of deals within the market. Despite all of these headwinds for landlords, demand for letting residential property remains high with tenants competing for limited stock.”
Emma Cox, Managing Director, Shawbrook
Source: property industry eye, June 2023
Contains HM Land Registry data © Crown copyright and database right 2023. This data is licensed under the Open Government Licence v3.0.
Written and supplied by The Outsourced Marketing Department. All details are correct at the time of writing (21 June 2023)
