Market update November 2023

House prices may have started to recover in October, but market activity is still well below historic averages, while housebuilding has plummeted. Meanwhile, both government and private reports agree that rents are rising, the only difference is by how much.

• House prices rose slightly from September to October, according to Nationwide’s latest report. The 0.9% seasonally adjusted increase took the average price to £259,423, still 3.3% below what it was in October 2022.
• Market activity has been “extremely weak” according to Nationwide. Just 43,300 new mortgages were agreed in September, around 30% below the average for 2019.
• Zoopla’s house price stats for October 2023 show a smaller year-on-year fall than Nationwide of 1.1%, but also reports a large decline in market activity. The housing platform suggests that there will be 1 million home purchases in both 2023 and 2024, about a quarter of a million below the 50-year average.
• Rents have performed much more strongly. The Office for National Statistics’ (ONS) Index of Private Housing Rental Prices for September found an annual growth rate of 5.7%, up from 5.6% in August.
• Private sector reports show even bigger increases in average rents, with Rightmove reporting 10% year-on-year growth for Q3. This is most likely because Rightmove bases its calculations on newly agreed rents, while the ONS figures include new and existing tenancies. According to flat-share site SpareRoom, growing numbers of tenants are taking second jobs just to afford rent.
• More landlords are falling into mortgage arrears despite rapid rental growth, says mortgage industry trade body UK Finance. Comparing Q3 2023 to the same period last year, almost 30% more buy-to-let mortgages were in arrears for at least 2.5% of the outstanding total. However, lenders have so far been willing to work with landlords, and repossessions remained the same as the previous quarter at 450.
• Housebuilding crashed in Q3 2023, according to the latest stats from the National House-Building Council (NHBC). Their figures show a 53% year-on-year fall in Q3 2023 to just 20,680 new homes, while completions fell by 15%. And good luck if you want to buy a new bungalow: just 228 new bungalows were registered in Q3 2023, the fewest since the NHBC started recording 80 years ago.