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Annual House Price Inflation Slows to 5.3% in February

The February 2023 UK House Price Index by Hometrack has revealed that annual house price inflation slowed to 5.3%, down from 8.6% a year earlier.

Buyer demand and sales volumes are 20-50% lower than a year ago but slightly ahead of the pre-pandemic years (2017-2019). Hometrack also estimates that sellers are having to accept an average 4.5% discount to their asking price to achieve a sale – the biggest gap for 5 years as a buyers’ market takes hold. The average discount to the asking price is £14,000, which means sellers are having to forgo a third of their pandemic house price gains.

The report states: ‘It is possible to take two opposing views on performance in the sales market. The glass-half-empty view is to look at trends on a year-on year basis, comparing this year to the red-hot market conditions a year ago. The glass-half-full view compares the current market to the pre-pandemic years (2017-2019) when activity levels and house price growth were more benign and trading conditions tougher.

‘Year-on-year comparisons are important for businesses benchmarking how they are faring compared to last year. Our data shows demand from home buyers has rebounded in the first two months of 2023 but remains at half the level recorded a year ago.

‘New sales volumes in early 2023 have also recovered, tracking the usual seasonal upturn we see each year, albeit 24% lower than this time last year. The reality is that current market conditions are more aligned with the pre-pandemic years with demand 8% higher and sales agreed up 1%. This is the more useful benchmark for businesses as they plan strategies and investment decisions now the frothy market conditions of the pandemic years are well and truly behind us.’ 

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