Average house prices in each region of the UK are revealed in a new index that says that the market “beat expectations” in 2023 despite higher taxes, inflation and the wider cost of living squeeze.
Halifax’s House Price Index said property values increased by 1.7 per cent across the board in 2023, although some regions, such as South East England, saw house prices fall significantly.
Meanwhile in other regions, such as Northern Ireland and North West England, the average price of a home increased in a welcome piece of news going into 2024 for those already on the property ladder.
Overall, average house prices rose by 1.1 per cent month-on-month in December – the third consecutive monthly rise. The typical UK house price in December 2023 was £287,105, up from £282,305 in the same month a year earlier.
Kim Kinnaird, director, Halifax Mortgages said that although there had been “encouraging” growth in the final three months of last year, this was preceded by property price falls for six consecutive months between April and September.
She also warned that the growth “we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand”. She added: “That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.”
Northern Ireland saw the biggest yearly increase in house prices by far, according to the Halifax index. The average price of a home there in December 2023 was £192,153 – up 4.1 per cent from December 2022.
Scotland was in second place, with the average price of a house there at £205,170 – up 2.6 per cent in the 12-month period.
South East England, which has some of the most expensive properties in the country, recorded the biggest fall in prices. The average price of a home in the region in December was £376,804 – down -4.5 per cent.
South West England saw the second-biggest drop, with the average property there costing £293,067 – down. -3.9 per cent. See below for a full list of how each region fared.
Mortgage lenders have this week begun slashing rates in anticipation of the Bank of England cutting interest rates in the spring as the economic outlook improves, making it cheaper to borrow money.
Analysts say the market is “heating up” and that a price war between lenders has already begun, but some homeowners still face a painful rise in their monthly costs when deals expire this year.
On Thursday Moneyfacts, the financial information service, said the average cost of a two-year deal had fallen from 5.92 per cent to 5.87 per cent – the lowest level for nearly seven years.
But while mortgage rates have started to come down they remain much higher than people have been used to in recent years, with more than a million homeowners set for a rise in their monthly payments when deals expire this year.
“The mortgage market may be heating up, but this won’t fully ease the pain for the roughly 1.6 million existing borrowers with cheap fixed rate deals expiring this year,” Alice Haine, personal finance analyst from Bestinvest, explained.
Lenders have priced in that the Bank will start cutting interest rates this year and have been reducing their prices for months ahead of an expected price war as the economic outlook improves further this year.
Analysts expect rates to fall further later in the year. Polly Gilbert, chief marketing officer at Tembo Money, said that a mortgage price war was “likely” on the horizon as inflation and interest rates fell.“How good to see interest rates finally moving in the right direction,” she told Sky News. “We’re seeing some frenzy beginning to build, it’s positive this time.”
First Direct became one of the latest lenders to announce it was cutting rates, with deals below 4 per cent set to be available from Friday. The announcement was made following rate cuts from other lenders this week, including HSBC UK and Halifax.
Full list of regions:
East Midlands: £234,578, -2.6%
Eastern England: £325,634, -3.5%
London: £528,798, -2.3%
North East: £168,274, -0.9%
North West: £226,765, 0.3%
Northern Ireland: £192,153, 4.1%
Scotland: £205,170, 2.6%
South East: £376,804, -4.5%
South West:£ 293,067, -3.9%
Wales: £216,730, -0.5%
West Midlands: £ 247,122, -1.4%
Yorkshire and Humber: £204,904, 0.1%
House prices fell for the first time in six months in March amid rising mortgage rates, according to Britain’s biggest mortgage lender.
A typical home now costs £288,430, around £2,900 less than last month, said Halifax.
The typical property value fell by 1% month-on-month, following a rise of 0.3% in February. Property prices increased by 0.3% annually in March, slowing from an increase of 1.6% in February.
Halifax mortgages director Kim Kinnaird said: “Affordability constraints continue to be a challenge for prospective buyers, while existing homeowners on cheaper fixed-term deals are yet to feel the full effect of higher interest rates.
“This means the housing market is still to fully adjust, with sellers likely to be pricing their properties accordingly.”
Read more: Easter brought new seller surge as property market rebounds
Markets are pricing in a potential first cut in interest rates by June, and a total of three quarter-point reductions by December.
Kinnaird predicted that the housing market will remain subdued this year: “Taking a slightly longer-term view, prices haven’t changed much over the past couple of years, moving in a narrow range since the spring of 2022, and are still almost £50,000 above pre-pandemic levels.
“Looking ahead, that trend is likely to continue.”
Analysts said the latest fall in house prices show that mortgage affordability has become “absolutely pivotal” to buyers.
Read more: When will interest rates fall and what should you do?
Imogen Pattison, assistant economist at Capital Economics, said: “The first decline in the Halifax house price index in six months confirmed that the slight rise in mortgage rates since the start of the year has caused house prices to stall.
“Looking ahead, we expect mortgage rates to remain higher than in January and February and hover at just under 5% over the coming months, which will subdue demand and prevent further gains in house prices. But given public house price expectations are positive, we doubt prices will fall much either.”
The average rate on a two-year fixed deal this week stood at 5.74%, while for a five-year deal, rates came in at 5.24%, according to figures from Uswitch.
Tom Bill, head of UK residential research at estate agent Knight Frank, said: “Since November, 10 weeks of recovery in the UK housing market have been followed by 10 weeks of drift.
“Mixed signals around inflation, rising supply and a wave of people rolling off sub-2% fixed-rate mortgages agreed in early 2022 mean the direction of travel for the property market is currently sideways. Once a rate cut appears firmly on the horizon and more mortgage rates start with a three, we expect stronger demand to push UK prices 3% higher this year.
“And if we are right to think that Bank Rate will be cut further than most forecasters anticipate, mortgage rates will fall to below 4% by this time next year, giving house prices a fresh boost.”
The Bank of England’s (BoE) decided to leave UK interest rates on hold at their current 16-year high of 5.25% for a fifth consecutive time.
Read more: Best UK mortgage deals of the week
Looking at the survey from a regional perspective, Northern Ireland remains the strongest performing nation in the UK, with house prices up by 4.3% on an annual basis, according to Halifax.
Properties in Northern Ireland now cost an average of £194,743, which is £7,972 more than a year ago.
In Wales annual property price growth slowed to 1.9% in March, from 3.9% in February, with the average home now costing £219,213.
Meanwhile house prices in Scotland rose 2.1% year-on-year to stand at £204,835.
In England, there is a clear north/south divide in when it comes to house prices.
The North West saw the strongest growth, up by 3.7% on an annual basis to £232,315.
Properties in Eastern England recorded the biggest decline of 0.9%, with homes selling for an average of £330,627, a drop of £2,878 over the last year.
London continues to have the highest average house price in the UK, at £539,917. Prices in the capital have increased by 0.4% over the last year.
Watch: Homeowners ‘should start feeling positive’ about selling their property, UK’s largest building society says
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House prices fell one per cent in March, according to the latest data, but strong quarter on quarter growth still suggests property valuations are set for a 2024 rebound.
According to the latest figures from Halifax, the average price of a home is £288,430, around £2,900 less than in February.
It follows five months of consecutive rises in property prices.
Nonetheless,two per cent quarter on quarter growth suggests there remains positivity in the sector.
The data mirrors a similar study earlier this week from Nationwide.
In London, the cost of a home grew by 0.4 per cent to £539,917, remaining the most expensive region in the UK to buy a home.
Kim Kinnard, director at Halifax mortgages said a monthly fall is “not entirely unexpected”.
“Particularly in view of the reset the market has been going through since interest rates began to rise sharply in 2022,” she said.
“Despite this house prices have shown surprising resilience in the face of significantly higher borrowing costs.”
She added: “Affordability constraints continue to be a challenge for prospective buyers, while existing homeowners on cheaper fixed-term deals are yet to feel the full effect of higher interest rates.”
“This means the housing market is still to fully adjust, with sellers likely to be pricing their properties accordingly.”
Today’s reading mirrors figures published by Nationwide earlier this week.
The lender said property remained up on an annual basis – by 1.6 per cent – but fell on a monthly basis by 0.2 per cent.
Rightmove reported last month that March saw the highest rise in house prices in 10 months with average price of newly marketed properties rose by £5,279 to £368,000.
It is thought that Brits will continue to hold off buying until interest rates come down from their historic highs.
The Bank of England held them at 5.25 per cent again, with most experts betting they will drop later in the summer.
Mortgage rates have also started rising again following signs that deals were cooling at the start of the year.
Sam Mitchell, chief of Purplebricks, said: “The blip in house prices was caused by a small increase in rates at the start of March, since then we have seen banks compete more aggressively, rates reduce further, inflation come down ahead of expectations, and both viewings and offers levels are ahead of expectations.
“Given the Bank of England’s future guidance is pointing to further cuts we expect prices gradually increase throughout the year until the inevitable uncertainty of the General Election bites probably in October. Sellers should act without delay if they want to take advantage of what should be a busy spring market.”
UK house prices rose for the fifth month straight in February, as buyers bet that mortgage rates will drop.
The typical price of a home is now £291,699, Halifax said, only £1,800 off the all-time high seen in June 2022.
The Halifax House Price Index showed a 1.7% year-on-year rise in UK house prices in February, slowing from 2.3% in January.
Month on month, the index added 0.4% compared to 1.2% the previous month.
Prospective buyers are being encouraged by easing mortgage costs and a rosier economic outlook but the lender warned that there is uncertainty on the horizon.
Read more: What the budget means for you
Kim Kinnaird, director at Halifax Mortgages, said: “Although lower mortgage rates, alongside expectations of Bank of England interest rate cuts this year, should help buyer confidence in the short term, the downward trend on rates is showing signs of fading.
“Raising a deposit and affording a mortgage remains challenging, especially for first-time buyers, so there could be a slowdown in the housing market this year.”
Regionally, Northern Ireland showed the strongest growth, with house prices rising by 5% annually to an average of £195,956.
The North West, North East, and Wales also saw significant increases.
London’s average house price remains the highest at £536,996, marking a 1.5% annual increase, the first positive growth since January 2023.
Eastern England experienced the most considerable decline last month with an average price drop of 0.8%.
Read more: What a 2p national insurance cut means for your finances
The increase in prices last month was nonetheless the weakest reading since September, underlining the headwinds continuing to face the housing market.
Nathan Emerson, chief executive of property professionals’ body Propertymark, said: “In order to persuade more people this is the year to sell their home, the Bank of England should start considering reducing interest rates to ease borrowing costs for aspiring homeowners.”
Tom Bill, head of UK residential research at estate agent Knight Frank, said: “Financial markets are expecting fewer rate cuts than the start of this year due to stubborn wage growth.
“This mixed picture means transactions should increase versus last year and we expect prices to rise by 3%, but the last two months of weaker inflation signals have been a useful reminder that asking prices need to remain realistic.
“The regional breakdown shows how affordability remains a big constraint on the market, with better-value areas seeing stronger price growth over the last year.”
Watch: UK house prices creep up as experts predict ‘smoother year’ for buyers and sellers
Download the Yahoo Finance app, available for Apple and Android.
Nationwide to buy Virgin Money
07:08 , Daniel O’Boyle
Nationwide is set to buy Virgin Money, in a shock deal valuing the bank at £2.9 billion.
The building society is said to pay 220p per share, a 38% premium on Virgin Money’s share price.
Chairman of Nationwide Building Society, Kevin Parry said: “A combination with Virgin Money would accelerate Nationwide’s strategy and create a stronger, and more diverse, modern mutual.
“The combination would increase Nationwide’s scale and financial strength, put us in a stronger position to continue to provide Fairer Share Payments to eligible Nationwide members, and offer rates for mortgages and savings that are, on average, better than the market average.”
Chairman of Virgin Money UK David Bennett said: “The Board of Virgin Money is pleased that Nationwide recognises the considerable strengths and opportunities that exist across our business, with the potential acquisition delivering attractive value for our shareholders. We are confident that a combination would support an exciting new chapter for Virgin Money to benefit from Nationwide’s scale and ambition.”
Halifax: House prices rise for fifth straight month
07:05 , Daniel O’Boyle
The average house price in the UK rose again in February, by another 0.4%, according to the Halifax House Price Index.
The typical price of a home is now £291,699, the country’s biggest mortgage lender said, only £1,800 off the all-time high seen in June 2022. It’s the fifth rise in a row after prices slid following a surge in mortgage rates.
Kim Kinnaird, directorof Halifax Mortgages, said: “UK house prices rose for the fifth consecutive month in February, up by +0.4% or £1,091 in cash terms, with the average house price now £291,699.
“On an annual basis, house prices were +1.7% higher than a year ago, slowing from +2.3% in January. However, these figures continue to suggest a relatively stable start to 2024 and align with other promising signs of increased housing activity, such as mortgage approvals.”
FTSE 100 set for steady open
07:05 , Michael Hunter
London’s main share index is expected to slip modestly at today’s open according to futures trade, after US stocks ended higher for the first tine in two sessions overnight.
The FTSE 100 will hand back just 3 points of its 33 point gain notched up yesterday, when it closed at 7679.31.
Asian shares were broadly higher.
The mood of measured optimism on global markets came after the chairman of the Federal Reserve, Jay Powell, signalled a US rate cut was on the cards this year in testimony to Washington lawmakers.
Recap: Yesterday’s top stories
06:48 , Simon Hunt
Good morning from the Standard City desk.
So, how was the Budget for you?
That may, or may not, prove to have been Jeremy Hunt’s final “fiscal event” as the ugly jargon has it.
If the election day is later than September, as seems likely, there might be room for one last Autumn Statement mini-giveaway to pep up the voters before they trudge to the polling booth to decide Rishi Sunak’s fate.
But there is still a big difference between being a properly functioning Opposition able to fill all the frontbench shadow roles, and a wipeout leaving the Conservatives as a demoralised rump unable to build a platform for a return to government for at least two Parliaments.
So what will the verdict on Jeremy Hunt be? He has played a terrible hand decently since inheriting the shambles that followed the mini-Budget in September 2022. He probably knew that the Tories’ goose was cooked from the moment that the markets took a look at Kwasi Kwarteng’s numbers and decided they did not add up.
All Hunt could do was pick up the pieces, act like a grown up, and steady the ship with what became known as the “dullness dividend”.The gilt and currency markets have rallied though the stock market remains as moribund as ever. The economy almost, but not quite, avoided the recession that Hunt himself confidently predicted delivering the Autumn Statement in 2022.
But “it could have been worse” is not a mantra you can sell to the electorate.
Here’s a summary of our top stories from yesterday: