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Residential market commentary Residential market commentary

Residential Market Commentary

Millie Todd • 23/01/2023

January 2023



A weaker economy, rising interest rates and high inflation have continued to impact buyers’ confidence. Market indicators are already showing a slowdown in housing market activity. Buyer demand in December 2022 was down 50% on last year (Zoopla External Link), mortgage approvals fell 20% between October and November 2022, with the lowest number of approvals since June 2020 (Bank of England External Link), and house prices are falling. According to both the Nationwide External Link and Halifax External Link house price indices, prices have experienced monthly declines for four consecutive months.

Buyers’ confidence is expected to remain subdued throughout 2023, with a continued slowdown in housing market activity anticipated.


The residential market is extremely sensitive to interest rate rises and as a result, we have seen mortgage interest rates increase throughout 2022. For example, a 2-year fixed mortgage rate on a 90% LTV was 1.95% in January 2022, peaking at 6.25% in November 2022. Rates improved in December 2022, declining to 5.96% (Bank of England).


In November 2022, 46,075 mortgages were approved, the lowest number of approvals since June 2020. This is 20.4% below last month and 29.7% below the pre-pandemic average (November 2017-2019 average).


In An estimated 114,200 sales were completed in November 2022. Sales were 4.3% above last month and 2.9% above pre-pandemic levels (November 2017-2019 average). These sales will mostly reflect transactions agreed several months ago (HMRC).


Nationwide reported annual house price growth of 2.8% in December 2022, a slowdown from November 2022 (4.4%). Prices fell by 0.1% month on month, the fourth consecutive monthly decline. Halifax also reported monthly declines for the fourth consecutive month.


A variety of issues have shook the UK economy throughout 2022. Inflation has soared, and two changes of Prime Minister have resulted in an extended period of uncertainty in fiscal and monetary policy. In addition, there have been ongoing concerns around the cost of living, labour shortages and the Russian invasion of Ukraine.

Inflation has continued to rise throughout 2022, with the CPI increasing from 5.5% in January to 11.1% by October (ONS External Link). In order to control inflation, the Bank of England increased interest rates. The first hike of 2022 was in February, when interest rates were increased from 0.25% to 0.5%. By November, the interest rate was 3.00%.

The residential market is extremely sensitive to interest rate rises and as a result, we have seen mortgage rates increase in 2022. For example, a 2-year fixed mortgage rate on a 90% LTV was 1.95% in January 2022, in November 2022, this stood at 6.25% (Bank of England External Link). However, there was little growth between October and November (6.22% to 6.25%).

The impacts of rising mortgage rates are starting to be felt across the housing market.

In November 2022, Zoopla External Link reported buyer demand 47% lower than the same period last year.

58,977 mortgages were approved in October 2022. This is 10.6% below last month and 11.7% below the pre-pandemic average (Bank of England External Link).

An estimated 110,850 sales completed in October 2022. Sales were 3.1% below last month but remained 2.7% above pre-pandemic levels (HMRC External Link).

According to Nationwide External Link, house prices experienced a 1.4% monthly decline in November 2022 and annual house price growth fell to 4.4%, a slowdown on 7.2% in October 2022.

A slowdown in the housing market is expected in 2023 as a weaker economy and rising interest rates continue to impact buyers.

Please get in touch for a full copy of our UK Housing Market Report.


The Bank of England raised interest rates by 0.75% to 3.00% on 3rd November 2022 as it battles to control inflation.

The residential market is sensitive to interest rate rises and over the last couple of months this has had a large impact on the mortgage market. A two-year fixed mortgage on a 90% LTV stood at 3.9% in August 2022, this increased to 4.5% in September 2022 and by October 2022 this was 6.2% (Bank of England)

We are already starting to see the impact this has on the housing market, with buyer demand in October 2022 down 16% on the 5-year average (Zoopla).

In September 2022, 66,800 mortgages were approved, a 10% monthly decline and further evidence that the market is cooling. However, approvals are still in line with pre-pandemic levels (Bank of England).

An estimated 112,370 sales completed in September 2022. Transactions were 11% above the pre-pandemic average and the same level as last month (HMRC). These sales are likely to reflect mortgage offers agreed several months ago.

House price growth in October slowed, with annual change at 7.2%, down from 9.5% in September. Month-on-month prices fell 0.9%, the first fall since July 2021 (Nationwide).

Over the next few months, we will get a better picture of the impact of mortgage rate rises on the sales market. We will also start to see the consequences the end of Help to Buy applications has on the new build sales market.

Help to Buy was a government scheme which helped buyers (first-time buyers only from April 2021) to purchase a property with just a 5% deposit. The government provided an equity loan of up to 40% in London and 20% outside of London. Since the scheme began in April 2013, it has helped 361,075 buyers. Help to Buy registrations closed on 31st October 2022. Deposit Unlock, First Homes and Shared Ownership are set to fill the gap, but with rising mortgage rates, and fewer low deposit mortgage products available, first-time buyers may struggle to purchase their first home.

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