House prices rebound, but the gap between buyer and seller expectations keeps getting wider

To view the full Market Index Q2 2023 click here.

London lettings and estate agent, Benham and Reeves, has released its latest Property Market Index Review providing the most comprehensive view of UK and London house price performance.

The Benham and Reeves Property Market Index Review is based on data from the top four existing indices. It looks at where the average house price sits overall when taking into account mortgage approved house prices from Halifax and Nationwide, seller expectations via the Rightmove House Price Index, and sold prices from the UK House Price Index.

It also highlights how the gap has changed between buyer and seller expectation, as well as asking price and actual sales price, on a quarterly basis across London and the UK.

Current property values

Based on a geometric mean of all four existing data sets, the index from Benham and Reeves shows the average UK house price sat at £307,191 for the second quarter of 2023.

This marked a 1% increase on Q1 2023, and the first quarterly increase since Q3 2022. And despite a media narrative of cooling house prices, it also marks a 0.4% annual increase, showing that the housing market has, in reality, been largely unmoved by recent economic turmoil.

In London, the current average house price is £572,230 having increased by 0.8% on the quarter. As with the national picture, this is the first price increase since Q3 2022 after consecutive quarterly declines of -0.7% and -1.8%.

Despite this quarterly recovery, London prices have decreased by -1.1% on an annual basis. This is the first yearly drop in London since Q4 2019.

Market Gap Between Mortgage Approval Price (Buyers) & Asking Price (Sellers)

In Q2 2023, the market gap between the mortgage approved price of a buyer (£273,431) and the asking price expectations of a seller (£370,651) increased to 35.6% across the UK. This is 1.5% higher than the previous quarter, and the largest gap seen since Q3 2020.

This increasing gap suggests that buyers are choosing to act with caution as borrowing becomes unusually expensive, but that sellers, who have upped their asking prices in the past quarter, are yet to accept that the UK market has cooled slightly.

In London, the gap between buyer (£516,923) and seller (£686,271) is 32.8%. This is 0.4% higher than last quarter, and the largest gap seen since Q1, 2020.

Market Gap Between Asking Price (Sellers) & Sold Price (Buyers)

Upon analysing the gap between the average asking price and the average sold price, the mismatch between seller expectation and the reality of current market conditions becomes abundantly clear.

Across the UK, the average sold price of £286,032 currently sits -22.8% below the average asking price of £370,651. This gap has been increasing quarterly since Q3 2022 and is 1.4% wider than the last quarter alone.

In London, the gap between asking price and sold price sits at -23% having also increased steadily since Q3 2022.

Director of Benham and Reeves, Marc von Grundherr, commented:

“It seems we have a market of cautious buyers coming up against optimistic sellers, and the gap in their expectations is widening.

But it’s by no means unusual for sellers to want more than buyers are willing to give, so none of this is unexpected, especially while the cost of living and borrowing is so high.

The fact that national sold prices have increased in the past quarter should also instil confidence in sellers by showing that the house price crash predicted by many experts following the disastrous mini-budget simply isn’t happening and, from where we are now, is unlikely to happen in the future.

We predict that buyers will continue to demonstrate a reluctance to overstretch their budgets and borrow too much, but that the resilient health of the market – when many said it would crash – means this is unlikely to have any major mid or long-term impact on house prices.”

The Benham and Reeves Property Market Index Review gauges the health of the UK and London property markets based on data from the top four existing indices. It looks at where the average house price sits overall when taking into account mortgage approved house prices from Halifax and Nationwide, seller expectations via the Rightmove House Price Index, and sold prices from the UK House Price Index.

Sources: Halifax House Price Index, Nationwide House Price Index, Rightmove House Price Index, Gov UK – UK House Price Index.
Land Registry, Halifax HPI, Nationwide HPI, Rightmove HPI