Dealing With Dampened Demand In UK Housing Market

22nd February 2023
Home > News > Dealing With Dampened Demand In UK Housing Market

In figures provided by Nationwide in February, house price growth has dipped to 1.1%, which is a fall from the 2.8% it experienced in December. The cost of borrowing is a significant factor in minimising demand across the UK.

Robert Gardner, Nationwide's Chief Economist, explains: “The start of 2023 saw a further slowing in annual house price growth to 1.1%, from 2.8% in December. Moreover, January saw a further monthly price fall (-0.6%), which left prices 3.2% lower than their August peak (after taking account of seasonal effects). However, there are some encouraging signs that mortgage rates are normalising, but it is too early to tell whether activity in the housing market has started to recover. The fall in house purchase approvals in December reported by the Bank of England largely reflects the sharp decline in mortgage applications following the mini-Budget.”

There are challenges to overcome in the 2023 housing market

We know there are many obstacles in the way of the housing market gaining momentum in 2023, but there is optimism that things will move forward. However, it would be foolish to ignore aspects like real earnings falling and the labour market likely to weaken. You also need to consider the increasing cost of paying a mortgage, and it is not unreasonable to assume many households will question if it is worth their while buying a home.

Robert Gardner, continued by saying; “Should recent reductions in mortgage rates continue, this should help improve the affordability position for potential buyers, albeit modestly, as will solid rates of income growth (wage growth is currently running at around 7% in the private sector), especially if combined with weak or negative house price growth. Nevertheless, the overall affordability situation looks set to remain challenging in the near term. Saving for a deposit is proving a struggle for many given the rising cost of living, especially those in the private rented sector where rents have been rising at their strongest pace on record (on data extending back to 2005 for England).”

Locations like Darlington provide opportunity

One thing we do know is that the North of England provides greater affordability and opportunity than the rest of the country. This is something which is in Darlington’s favour, and we believe will see many people looking for property in this part of the country.

Robert Gardner also said; “Affordability pressures remain particularly acute in London and the south of England, where mortgage servicing costs have risen sharply compared with a year ago. Scotland and the North continue to be the most affordable regions but, even there, mortgage payments as a share of take-home pay are at their highest level for over a decade. There continues to be a significant gap between the least affordable and most affordable regions, although this has remained broadly stable over the last year. London continues to have the highest house price-to-earnings ratio at 9.2, but this is still below its record high of 10.2 in 2016. Scotland and the North region have the lowest house price-to-earnings ratios at 3.4. Over the longer term, Northern England and Scotland have historically seen lower HPERs than Southern England, Wales and Northern Ireland.”

No matter what move you are looking to make in, out or around Darlington, we are on your side, and ready to assist you.

Contact Anthony Jones for all Darlington property matters

If you are looking for help with any matter of the Darlington property market, it is best to speak to property professionals. No one knows for sure what is going to happen next, so we won’t claim to have all the answers, but the Anthony Jones team is keen to help you as best we can. If you would like to contact us over housing matters, please call us today on 01325 776424.


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