UK house prices fall year-on-year for first time since June 2020; Bank of England governor Andrew Bailey to speak at cost of living conference
As reported earlier, the housebuilder Persimmon has also sounded the alarm on the housing market. Dean Finch, the chief executive, said:
The market remains uncertain. Our marketing campaign has helped improve the group’s sales rates in the new year from the lows at the end of 2022, but they still remain lower year on year. We have carefully managed our pricing, recognising the improved value and energy efficiency of our product in these difficult times and sales prices have proved resilient. We responded quickly to stimulate sales, enhance cost controls and preserve cash, promptly slowing new land investment in the fourth quarter of last year.
Nonetheless, the sales rates seen over the last five months mean completions will be down markedly this year and as a consequence, so will margin and profits. However, it is too early to provide firm guidance.
Looking ahead, we still expect house prices to fall over the coming months until they are about 8% below their peak. Mortgage rates appear to have hit a floor for now, and households’ real disposable incomes will be squeezed again in April by the withdrawal of energy price subsidies by the government.
In addition, expectations among the public that house prices will fall sharply are well-entrenched — 62% of households expressing a view expected house prices to drop by at least 5% over the next year, according to the BSA’s Q4 Property Tracker Survey —suggesting demand won’t recover until a significant drop has materialised. We have tentatively pencilled in a 5% rise in house prices for 2024, however, reflecting our view that the monetary policy committee will start to reduce interest rates next year.
