UK housing
A key driver of the economy in the UK is consumer spending, which is linked to consumer confidence. If house prices fall it is hard to see a robust consumer recovery in 2023.
Mortgage approvals were 50% lower in December 2022 than in December 2021, falling to levels only seen in the Covid lockdown of Spring 2020 and the Financial Crisis of 2008. The level of mortgage approvals tends to lead house price inflation by about 3 months.
Sharply lower mortgage approvals in the UK, point to lower house price inflation year on year (yoy).
Source: Bloomberg, Artorius
The Royal Institution of Chartered Surveyors (RICS) have a monthly survey which takes the temperature of the housing market. The January 2023 RICS UK Residential Survey results continue to depict a muted market backdrop at present, with new buyer demand, sales, fresh listings and prices all reported to be on a downward trend. What’s more, near-term expectations suggest this picture is likely to remain in place for a while longer as the market adjusts to the higher interest rate environment.
New Buyer enquiries have fallen sharply in the a past few months, potentially reflecting the impact of higher mortgage interest rates. A negative New Buyer enquiries balance shows that most surveyors are seeing a decline in new buyers coming into the property market, and historically this has led to falling house prices.
Survey data points to a sharp decline in New Buyers for houses and historically this has been followed by a fall in house prices.
Source: Bloomberg, Artorius
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