The housing market remains busy despite house prices flattening out, but honing in on different parts of the country gives a much clearer view of the sector’s performance.
The latest house price index released by Rightmove, looking at figures for May, found that house prices remained stable with 0.0% change month on month, with a negligible £82 dip in values. This brings the average property price to £372,812 taking every region of the UK into account.
Despite some turbulence caused by rising mortgage rates, it seems buyer confidence and appetite is remaining resilient. Rightmove found that buyer demand over the last two weeks was 6% higher than during the same period in 2019, in what would be considered a ‘normal’ market.
To put the current performance into perspective, in terms of house prices, the 10-year average house price increase for this month is 0.6%. It is only in the immediate post-Covid period that we have seen rocketing asking prices across much of the UK.
As Rightmove points out, recent events have provoked more affordability constraints among buyers, bringing in an added level of “pricing realism” among sellers – as Rightmove’s index is based on asking prices as opposed to sold prices.
Which regions are outperforming?
Taking a very broad view of the UK housing market as a whole isn’t always the best strategy when thinking about buying, selling or investing in property, as this does not factor in how differently markets perform across the various regions, or even when focusing on particular towns, cities and areas.
For example, some of the country’s top performing cities in terms of the strength of their property markets continuously outperform the UK or the England average when it comes to house prices, such as Manchester and Birmingham where investment levels are particularly high.
In the Rightmove index, the north east of England is by far the strongest with a well-above-average 4.9% month-on-month house price increase. Annually, this represents a 5.5% rise, bringing the average asking price to £188,414.
The second biggest increase in England specifically was seen in the West Midlands, with a 1.1% monthly rise and an annual jump of 2.5%, bringing average prices there to £291,937. While it is a pricier area to buy than the north east, it remains well below the UK average.
Next, the north west has outperformed the average, with a jump in house prices of 0.5% between April and May. Annually, prices have risen by 3.6%, and the average across the region is now £257,468.
House prices lagging in London
When you look at the region-by-region performance from the Rightmove index, it is clear that London is somewhat substantially skewing the figures. The capital city experienced a -1.6% fall in house prices for the month, and prices there have only grown by 0.5% year-on-year.
However, London’s property prices also remain well above the national average at £685,241, according to Rightmove.
The capital’s housing market has been lagging behind the rest of the UK for a couple of years now, although as is the case for any broad regions, there are certainly pockets of London that are outperforming the rest, such as in parts with high levels of ongoing regeneration and improvement works.
The East Midlands region had the second biggest house price drop for the month, with a dip of -0.6% for the month, and prices there are 0.2% higher than they were a year ago, at £286,596.
Finally, Yorkshire and the Humber was also in the red when it comes to asking prices, with a loss of -0.5% on average. The region performs better on an annual basis though, with house prices up by 2.4% compared with May 2022, sitting at £247,012.
Tim Bannister, Rightmove’s director of property science, said: “We expected some more twists and turns this year and we’ve had several in the last month, including stubbornly high inflation figures, surprisingly large average wage increases, and their eventual impact on mortgage interest rates and availability.
“We expect that there may be more change to come depending on this week’s inflation figures and the Bank of England Base Rate decision. It is likely to feel very frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find.
“Although the impact of higher mortgage rates on activity levels has been limited so far, with prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises.”
