Average house price remains flat in May
Halifax has revealed that annual house prices have fallen for the first time since December 2012, dropping by -1.0%.
UK property values remained flat in the month, with 0.0% movement in May (Apr: -0.4%) meaning that the average home now costs £286,532.
The report also found that prices for new-build properties are rising by 2.8% over the year – but at the weakest rate for almost three years.
Detached houses are the only property type to post a year-on-year rise, at 0.4% growth in value. Flats have fallen by -1.9%, followed by terraced homes (-1.0%) and semi-detached houses (-0.5%).
All areas of the UK have also seen house prices fall over the year, apart from Wales, which remained unchanged at 1.1% growth over the previous twelve months.
Given the effectively flat month, the annual decline largely reflects a comparison with strong house prices this time last year, as the market continued to be buoyant heading into the summer.
Kim Kinnaird, Director, Halifax Mortgages
As expected the brief upturn we saw in the housing market in the first quarter of this year has faded, with the impact of higher interest rates gradually feeding through to household budgets, and in particular those with fixed rate mortgage deals coming to an end.
Meanwhile, credit ratings agency Moody’s has predicted that average house prices in the UK will drop by 10% over the next two years.
“Persistently high inflation and the recent spike in lending rates will trigger a correction in the UK housing market,” Moody’s Investor Service said in a report.
Moody’s also forecast that a recession would be triggered if house prices were to fall by more than 21%.
“The UK sovereign would enter a recession in the second half of 2023, lasting for six quarters. Unemployment would reach 6% by end 2024, still below its peak in the global financial crisis,” the report said.
Planning applications fall in first quarter as housebuilding output slumps
Official figures have revealed a 13% fall in planning applications submitted to local planning authorities in England between January to March 2023, when compared to the same period last year.
The data, published by the Department for Levelling Up, Housing and Communities found that of the 96,000 applications submitted in the quarter, 75,000 (86%) were granted; down by 11% from the same quarter in 2022.
The North East had the highest percentage of decisions granted, at 93%, with London experiencing the lowest rate, at 79%.
Housebuilding output in May dropped at the steepest rate for three years, according to the latest S&P Global / CIPS UK Purchasing Managers Index.
Residential building output fell for the sixth consecutive month to reach 42.7 on the index. Any score below 50 indicates a fall in activity.
Overall construction output rose modestly from 51.1 to 51.6, with poor housebuilding activity offset by increased commercial and civil work.
A further hike in interest rates is expected this month and along with the relentless increase in the cost of living is making buyers hesitate about purchasing homes.
John GLen, Chief Economist, CIPS
As a result, builder confidence was pinched to remain below the survey average, as business costs remained high and firms expanded their workforce numbers at only a modest pace as they were cautious about their own affordability rates.
Meanwhile, the Construction Leadership Council (CLC) is pushing for immigration restrictions to be eased for more trades, in an attempt to ease labour shortages.
In an updated version of its report of shortage occupations in construction, the CLC has asked the Migration Advisory Committee (MAC) to include trades such as bricklayers, carpenters, plasterers and roofers in their review, due to be published in August.
The MAC advises the Home Office on immigration system reform.
Crest Nicholson reveals slump in half-year profit
Housebuilder Crest Nicholson has reported a 60% fall in profit in the six months ending 30 April 2023, as a result of market turmoil and economic uncertainty.
The developer said that its adjusted pre-tax profit fell to £20.9m from the £52.5m reported in 2022’s half-year results.
During the period, home completions decreased from 1,096 in the same six months last year to 894, with a sales rate per week per outlet falling to 0.54 compared to 0.72 in half-year 2022.
Meanwhile, the London School of Economics’ latest report on housing policy calls for the industry to become one of the “great offices of state”, as it highlights how several initiatives since the mid-70s have “failed to deliver a coherent, integrated housing policy.”
The report, titled Achieving a more coherent and consistent approach to housing policy, is a call-to-arms for a medium-term framework for housing with an implementation plan “which is reviewed regularly and can be adapted to changing circumstances.”
“We have seen some 15 Ministers for Housing since 2010,” states the report. “This is unacceptable.”
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