- Average UK house price fell by 1.4% in the year to December
- Prices in West Lancashire up 9.8% while some London areas saw 10%-plus drops
House prices officially fell last year, according to the latest figures from the Office of National Statistics.
The ONS revealed the average UK house price slipped 1.4 per cent in the year to December, as the mortgage crunch took its toll on property sales.
It means the typical home lost £4,000 in 2023, with the average sold price coming in at £285,000.
But some locations suffered much bigger declines, with six English local authority areas seeing house price falls of 10 per cent or more.
Meanwhile, others bucked the trend with nine seeing property prices climb by 5 per cent of more.
The ONS figures are widely viewed as the most comprehensive and accurate house price index. This is because this report by the UK’s official statisticians uses Land Registry data and is based on average sold prices. However, this also means its data lags behind other indexes.
A geographical split emerged last year in the UK when it came to property prices.
England and Wales saw typical sold prices fall by 2.1 per cent and 2.5 per cent respectively in the 12 months to December.
However, in Scotland and Northern Ireland average prices actually rose by 3.3 per cent and 1.4 per cent.
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Across the country’s regions, house price changes ranged from a 4.8 per cent decline in London and a 4.6 per cent fall in the South East, to a rise of 1.2 per cent in the North West and a slight 0.3 per cent gain in the West Midlands.
But there were much greater differences between local authorities.
This stresses the all important point – the property market doesn’t move as one, but comprises thousands of localised markets, all behaving differently.
For example, average prices in West Lancashire rose by a staggering 9.8 per cent last year, with the typical home rising from £230,000 to £253,000.
In the City of London, average house prices fell by 17.8 per cent from £975,289 to £802,000.
Where house prices fell most in 2023
Some of the worst performing housing markets are to be found in London. Prices in the capital fell on average 4.8 per cent in the 12 months to December.
Average house prices in The City of London (the capital’s historic financial district) are down a whopping 17.8 per cent, according to the ONS, while the City of Westminster is down 16.1 per cent. Prices in Kensington and Chelsea are also down 13.7 per cent.
The ONS cautions against reading too much into figures for very small transaction areas, such as the City of London, as they can be skewed by a few sales.
Outside of the capital, Gosport on the south cost saw an 11.5 per cent decline in house prices. Some popular commuter hotspots also suffered, with house prices falling 11.3 per cent in Tunbridge Wells, 9.5 per cent in Welwyn and Hatfield, 9.2 per cent in Runnymede and 9.1 per cent in Surrey Heath.
Where house prices rose most in 2023
North West locations were strong performers last year, with the leading local authority area West Lancashire posting a 9.8 per cent rise in house prices.
Prices in the borough of Rossendale in the North West of England also rose by 7.9 per cent last year, according to the ONS.
Interestingly, earlier this week, Rossendale was also rated as the hottest property market of 2023 by Zoopla.
The property website revealed that some 44.2 per cent of homes there rose in value by 5 per cent or more last year – which is more than any other local authority.
At the other end of the country, Winchester and the Mole Valley, in the South, saw house price gains of 7.9 per cent and 7.5 per cent.
Will house prices rise or fall in 2024?
The ONS says average house prices actually increased by 0.1 per cent between November and December last year.
This looks rather positive given that average prices fell 0.8 per cent during the same period 12 months ago.
Last week we heard from two separate reports that the housing market may be heating up with increasing numbers of people looking to buy or sell.
The reset is quickly moving towards a recovery Jonathan Hopper, Garrington Property Finders
The latest property market survey by the Royal Institution of Chartered Surveyors (Rics) showed that estate agents and surveyors are seeing rising numbers of buyer enquiries as well as more sellers coming to market.
Meanwhile, Rightmove revealed a record number of homeowners contacted an estate agent to get their home valued in January.
Jonathan Hopper, CEO of Garrington Property Finders says: ‘The reset is quickly moving towards a recovery.
‘Crucially we’re starting to see more stock come onto the market as people who delayed their moving plans last year decide that now is the time to act before prices pick up speed again.
‘The recovery remains tentative, but there is a growing sense that 2023’s price reset is over, and that last year’s widespread price falls in England and Wales have made many areas better value.’
The renewed confidence from buyers has come alongside mortgage rates falling from their peak late last summer, with big cuts arriving in the new year.
Nicky Stevenson, managing director at national estate agent group Fine & Country adds: ‘House prices finished the year down compared to 2022, as the gap between what sellers would accept and buyers would pay for a home narrowed.
‘However, the small uptick in prices in December lends credibility to the suggestion that the property market is in a much healthier position overall than it was at the start of last year.’
Many within the property industry believe that mortgage rates have now reached levels that will encourage buyers and home movers back into the market.
Although average fixed mortgage rates remain just above 5 per cent, according to Moneyfacts, the cheapest deals are now below 4 per cent.
There is also now wide expectation that mortgage rates may fall further as the year progresses.
Jonathan Hopper says: ‘As the cost of borrowing edges down, homes are becoming more affordable.
‘With consumer inflation stuck at double the Bank of England’s target, interest rates may come down more slowly than many had hoped, but last year’s trickle of buyers has already turned into a stream.’
Stevenson adds: ‘Expectations are that rates could fall at some point this year, which will widen affordability and encourage more demand.
‘Today’s news that inflation held at 4 per cent will boost hopes that interest rates will be cut sooner than anticipated.
‘The Bank of England has also reported three consecutive monthly increases in mortgage approvals as momentum builds in the housing market.
‘This pent-up demand from buyers who paused or held off on their property search means there is growing activity on the market.’
Another factor that may support house prices is the fact the number of new homes planned by housebuilders fell by almost half last year.
Interestingly, the average price of a sold new build rose by 9.4 per cent in 2023, according to the ONS figures.
A lack of supply of new homes will likely help support prices further, according to Anthony Codling, head of European housing and building materials for investment bank RBC Capital Markets.
He adds: ‘Today’s ONS data confirms that 2023 was not the year of the house price crash and with falling inflation, falling mortgage rates and rising wages we doubt that a crash will come in 2024, and the recent words spoken, and actions taken by housebuilders confirms our view the housing market is looking up rather than down so far this year.
‘The scene is set for a recovery, and we have our fingers crossed that any moves taken by politicians this election year will help rather than hinder the housing market recovery.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
- Some 44% of homes fell in price in 2023 – most of them in the south of England
- But 35% of homeowners saw value of their home increase, says Zoopla
- Rossendale in North West had highest proportion of homes rising by 5% or more
- Hamptons also reports that market appears to have turned corner in 2024
More than two in five homeowners saw the value of their property fall last year, according to the latest analysis by Zoopla.
The property website says 13 per cent of homes fell in value by 5 per cent or more in 2023, while a further 31 per cent fell in value by between 1 and 5 per cent.
In contrast, there were some areas of the country where almost a fifth of homeowners saw their house price rise by more than 5 per cent.
We look at the house price winners and losers of 2023.
Where are house prices falling – or growing slower?
The falls have been felt more in the South of England with 18 per cent of homeowners in the South East seeing their homes fall in value by 5 per cent or more.
Zoopla says it has noticed that housing markets close to rural and coastal areas in the south East have cooled since the pandemic boom.
More than half of homeowners in the seaside towns of Dover and Hastings will have seen a 5 per cent home value decline in 2023, for example.
However, while the average UK house price moved lower over 2023, the nation’s 30 million homes are spread across thousands of housing markets, each with its own characteristics and drivers.
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More than a third of homeowners saw their home increase in value, according to Zoopla’s analysis.
In fact, one in 10 homeowners would have seen their house price rise by 5 per cent or more in 2023. That equates to three million households.
However, the overall gains by those households that did rise in value last year were significantly less than in the previous year.
It says the average annual gain made by homeowners whose properties rose in value, was £7,800 last year – a big drop from the £19,700 recorded in 2022.
Where are house prices going up?
Zoopla noted a clear north-south divide in the fortunes of homeowners in 2023 as lower prices cushioned the impact of higher mortgage rates in more affordable parts of the country.
As a result, it says more homes actually registered increased values in northern Britain.
Last year, the North West had the highest proportion of homes rising in value by 5 per cent or more.
Zoopla says that half a million homes (17 per cent of houses) in the region recorded gains of over 5 per cent or more.
The North West was closely followed by Scotland, where 16 per cent of homes increased in value by 5 per cent or more in 2023.
Izabella Lubowiecka, senior property researcher at Zoopla says: ‘While national house prices indices pointed to modest house price falls over 2023, our property by property level tracking of home values shows that most homes saw their value unchanged or slightly higher over the year.
‘Value reductions were focused in southern England while modest gains were recorded in lower priced, more affordable housing markets.’
Rossendale is hottest property market
One local area in particular bucked the typical housing market trend in 2023 – one of prices predominantly falling or stagnating.
The borough of Rossendale in the North West of England was rated as the hottest property market of 2023 by Zoopla, with the highest concentration of homes increasing in value by 5 per cent or more of any local authority.
Some 44.2 per cent of homes have risen in value by 5 per cent or more in that area, according to Zoopla’s data.
Rossendale is situated in East Lancashire, bordering Bury, Hyndburn, Burnley, Todmorden and Rochdale.
Graham Shuttleworth, manager at Ryder & Dutton estate agents in the town of Rawtenstall, which is based in the Rossendale borough, says the area is benefitting from the house price ripple effect coming out of Manchester as well as millions of pounds of investment coming into the area from the government’s levelling up scheme.
‘There are three really exciting market towns that are driving growth in Rossendale. Rawtenstall, Haslingden and Bacup. All are great places to live and within easy commuting distance of Manchester city centre.
It’s a perfect destination for all ages who want to move out of the city centre but stay close by Rossendale estate agent, Graham Shuttleworth
‘We are based in Rawtenstall and the place just keeps improving with increasing numbers of trendy bars, shops, craft breweries and restaurants opening up.
‘If you miss the traffic it takes 20 minutes to drive into Manchester and otherwise it’s 45 mins in rush hour, via the convenient M66 link.
‘So it’s a perfect destination for all ages who want to move out of the city centre but stay close by. The area has become really popular for families.
‘There is also a massive amount of regeneration coming into some of the town centre redevelopments in the area linked to government levelling up funding.
‘Haslingden Market town centre is being redesigned while similar multi million pound projects are underway in Bacup and Rawtenstall.’
Other local areas that saw roughly a third of homes increase in value by 5 per cent or more include Blackburn with Darwen in the North West of England and Telford and Wrekin in the West Midlands.
What next for house prices?
Zoopla is predicting modest house price falls of 2 per cent in 2024 across the UK.
However, as shown, exactly how this affects individual homeowners will depend on their location.
Zoopla expects those who saw home value growth in 2023 to see similar increases in 2024.
It says high mortgage rates will continue to limit buying power and will be most felt in high-value regions in the South of England, contributing to further home value drops.
This is particularly true for those who own a flat or detached home in the South, who Zoopla advises should continue to price realistically in order to complete a sale.
However, while Zoopla is predicting more of the same in 2024, the property agent Hamptons is reporting that the housing market has turned a corner.
In January, sellers were less likely to cut their asking price than at any time over the last eight months, according to Hamptons.
It revealed that 48 per cent of homes sold in January across England and Wales had been subject to a price reduction, down from a peak of 55 per cent in October 2023.
Over a quarter of these homes sold above their final asking price, the highest share since October 2022.
Hamptons also reported that with more buyers around, new homes coming onto the market are selling quicker than they were last year.
It said 9 per cent of homes that came onto the market in January sold within a week, up from 6 per cent in January 2023.
However, given that many buyers and sellers are still trying to adjust to the market, this figure remains considerably lower than in January 2021 when 19 per cent of homes sold within a week.
Aneisha Beveridge, head of research at Hamptons, believes the early signs in 2024 suggest that the market has firmly turned the page.
‘Falling mortgage rates have been the primary catalyst, tempting last year’s missing movers to restart their property search,’ says Beveridge.
‘Consequently, more households were looking to buy last month than in any January over the last decade, including the start of both 2021 and 2022.
‘First-time buyers and second steppers, who tend to be most reliant on mortgage finance, are at the forefront of the recovery.
‘This injection of demand is starting to stabilise house price falls, particularly for mid to lower-priced homes, which should also improve selling conditions further up the chain as the year progresses.
‘That said, the affordability picture is still more challenging than it was a few years ago which will keep a tight lid on price growth.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
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