In December 2023, the average UK house price stood at £264,400, showing no change from the previous month but marking a 0.8% decrease compared to the previous year, according to the latest house price data from Zoopla.
Detached houses saw a 1.3% year-on-year decrease, the most significant drop among property types, bringing their average price to £447,500. Flats experienced a 1.1% decrease to £190,200, while semi-detached and terraced houses saw smaller declines of 0.7%, priced at £268,700 and £232,500, respectively.
The pace of annual house price falls has slowed, with a 0.8% decrease in December compared to a 1.4% fall in October. The most notable price drops were in the East of England and the South West, while Northern Ireland saw a 3.2% increase in house prices over the year.
Buyer demand has seen a significant seasonal uplift at the beginning of 2024, with sub-5% mortgage rates driving demand 12% higher than the previous year, albeit still 13% below the five-year average. This resurgence follows a weaker second half of 2023, attributed to rising mortgage rates delaying buyers’ decisions.
All indicators of housing market activity, including buyer demand, agreed sales, and new housing supply, have increased year-on-year. The most significant rises in new sales were in Yorkshire and the Humber and the West Midlands, with a 22% increase in homes listed for sale, suggesting growing confidence among sellers.
London and the East of England have experienced the most significant rebound in buyer demand at the start of 2024. Despite London’s house prices rising only 13% since 2016, compared to 34% in the UK overall, the capital’s market is showing signs of improvement. London’s affordability has improved to its best level since 2014, although it remains high by UK standards, with a house price to earnings ratio of 13:1.
While the market shows renewed activity, it remains a buyer’s market with several factors keeping house prices in check, including a greater supply of homes and price sensitivity due to pending mortgage refinancing for half of mortgage holders. Sellers are advised to price realistically to secure sales in this improved but cautious market environment.
Looking ahead to 2024, the adjustment to higher mortgage rates is expected to continue, with mortgage rates likely remaining in the 4% to 5% range. This environment will support sales volumes rather than significant price increases, maintaining a balanced market for buyers and sellers alike.
Reaction
Nathan Emerson, CEO of Propertymark:
“An increase in house sales should give people the confidence to sell their properties again. As the Bank of England chose not to increase interest rates before the end of 2023, consumers should feel positive that borrowing costs are not going to increase for them. The next Monetary Policy Committee in February could be an opportunity for the Bank of England to cut interest rates and stimulate growth in the housing market now that inflation is not at the levels we witnessed at the start of last year.”
