National price rises slow but remain positive: e.surv

House prices in England and Wales rose by 0.5% in December – the same rate as seen in November, according to the latest house price index from e.surv.

On an annual basis, the rate of price growth has slowed from the peak rate of 12.9% in August 2022 to 7.8% by the end of December. This rate has fallen from November’s 9.2%, and although the trendline is still showing an upward trajectory, market expectations are that the rates of growth will continue to fall and "indeed may become negative".

The annual rates of price growth of the top four GOR areas have seen increases over the last month, with the North East in particular having the largest increase, from 10.1% in the previous month, to 13.4% in November. In fact, price growth has accelerated in 7 of the 10 GOR areas, with slowing rates limited to three regions, all located in the south of England, being the South East, Greater London and the South West.

The East and West Midlands remain the top two regions, as was also the case last month, in terms of having the highest annual rates of price growth, at 14.1% and 13.7% respectively. In the East Midlands, six of its ten constituent unitary authority areas are setting new record average prices, and Rutland has 24% annual growth – the highest rate of all unitary authority areas in England.

The West Midlands is in second place for the fifth month running, with Herefordshire experiencing the highest annual price growth in the region, of 18.2%, followed by the West Midlands (which includes Birmingham), at 16.6%.

By contrast, Greater London has the lowest annual growth rate of just 1.5%, although 21 of the 33 London boroughs saw prices rise on an annual basis. Broadly, the most expensive inner-city areas recorded falling values - impacting eight of the top ten boroughs ranked by price. For example, in the City of Westminster, which is ranked in second place in London in terms of its average value, house prices have fallen by -30.6% over the last twelve months, while in Kensington and Chelsea – the most expensive borough in London – prices fell by -14.0% over the same period.

Richard Sexton, director at e.surv, commented: “Our data this month shows a slowing rate of growth, which will surprise no-one but nevertheless is positive.

“The average completion price paid in both cash- and mortgage-based transactions for a home in England and Wales was £380,450, some £1,900 higher than in November.

“There are a couple of reasons why our findings are noteworthy. One is that we use all completion data for the period, from the ONS which includes cash sales and is the final price paid – as opposed to a price agreed earlier in the process such as at mortgage approval stage and therefore which might fluctuate subsequently.

“But the other point to be made is that the relative attractiveness of property remains in comparison to other asset groups over the longer-term. From the start of the pandemic in March 2020 to the end of November 2022, the average price paid for a home has increased by some £66,100, or around 21.1%. Housing as an asset group is still outperforming most other investments – particularly when you see that growth figure over the period is greater than that in consumer price inflation (including housing - CPIH) of 14.9% over the same period.

“It is very likely that whatever the economic weather the lack of supply will continue to underpin the relative strength of UK housing.”