Average house price annual inflation was negative 1.4% in the 12 months to December 2023, compared with negative 2.3% (revised estimate) in the 12 months to November 2023, according to the latest data from the Office for National Statistics (ONS).
The average UK house price was recorded at £285,000, which is £4,000 lower than 12 months ago.
Average house prices in the 12 months to December 2023 decreased in England to £302,000 (negative 2.1%), decreased in Wales to £214,000 (negative 2.5%) and increased in Scotland to £190,000 (3.3%).
The average house price increased in the year to Q4 (October to December) 2023 to £178,000 in Northern Ireland (1.4%).
On a non-seasonally adjusted basis, average UK house prices increased by 0.1% between November 2023 and December 2023, compared with a decrease of 0.8% during the same period 12 months ago.
Of English regions, annual house price inflation was highest in the North West, where prices increased by 1.2%.
London was the English region with the lowest annual inflation, where prices decreased by 4.8% in the 12 months to December 2023.
Reaction:
Kirsty Wells, director at Blueprint Mortgages & Protection:
“The annual decrease in prices was expected due to the time lag in this data but still shows a slight improvement compared to the year to November. In the fourth quarter of 2023, activity in the property market definitely picked up. We had the busiest December ever for mortgage enquiries.
“Demand for property in 2024 has been high, with lots of properties that were stagnating last year having offers made in January. If mortgage rates drop further in 2024, and we get a cut to the base rate, I think that will do more to boost sentiment than any property market incentive that could be announced in the Spring Budget.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“Though this data shows prices are down on an annual basis, it paints a picture of how the market was several months previously, and the picture now is really quite different. December saw demand pick up as mortgage rates decreased and 2024 has started with a tsunami of enthusiasm and enquiries from potential homebuyers, with growing confidence that mortgage rates have peaked and house prices will start bouncing back. The latest static inflation data will see consumer confidence continue to grow, and no doubt there will be some property market incentives announced prior to the forthcoming General Election.”
Ranald Mitchell, director at Charwin Private Clients:
“Despite annual price growth being in the red according to this latest index, homebuyers are showing signs of getting their mojo back, with a notable increase in interest from movers and first-time buyers. Add to this the lure of the Government-backed 99% mortgages, many more could jump into action, when and if the low despoit scheme arrives. With all this positive activity, it will surely underpin average values, but it’s unlikely we’ll see any boom in house prices this year.”
Justin Moy, managing director at EHF Mortgages:
“We’ve definitely seen more confident buyers returning to the market since the start of the year, seizing the opportunity to move given reduced house prices, better priced mortgages and a level of pent-up demand. Our purchase applications were up 10 times what we saw in January 2023, with many first-time buyers starting their mortgage journeys and asking for their budgets.”
Graham Cox, founder at Self Employed Mortgage Hub:
“Demand for property has been strong so far this year, helping to support prices. But buyers should still proceed with caution when making offers, as property values have not fallen nearly enough to compensate for the doubling or tripling in mortgage rates over the past couple of years. Sadly, many vendors are distressed sellers, unable to refinance affordably, and looking to downsize. And with the UK on the cusp of a recession, house prices could easily fall this year.”
Akhil Mair, director at Our Mortgage Broker:
“The dip in mortgage rates unquestionably stirred some interest in the fourth quarter of last year, but the surge of buyers hasn’t materialised quite yet. Demand in 2024 has been mixed, falling short of expectations. The upcoming Spring Budget announcement may inject much-needed enthusiasm. While 4% inflation stability offers some reassurance to buyers, inflation is still double the target. High anticipation surrounds the Spring Budget, with hopes for impactful incentives like reduced property taxes, to revitalise the market. Geopolitical tensions and economic shifts could further impact the property market, underscoring the need for proactive measures to incentivise investments and aid first-time buyers amid uncertainty.”
Emma Cox, MD of real estate at Shawbrook:
“2023 ended with a downturn in property activity with challenging market conditions preventing buyers from making any major moves.
“2024 however is looking more positive with a reduction in mortgage rates fuelling activity at the start of the new year. Landlords should take note of the continuing trend among professional property investors in 2024, as they strategically diversify their portfolios to spread risk and shield themselves from challenging markets. This presents an opportune moment for professional investors to assess and review their portfolios and the potential benefits of diversification. We’re seeing a strong demand for commercial finance products.
“Despite market challenges, there remains an overall sense of optimism. The combination of falling mortgage interest rates and a buyers market is encouraging landlords to seize opportunities and expand their portfolios.”
Tony Hall, head of business development, Saffron for Intermediaries:
“The latest figures make for rosy reading this Valentine’s Day, with house prices holding firm despite wider economic pressure. On a more granular level, we’re still seeing huge variation in price changes depending on the region and type of property, with Zoopla recently noting that house prices in the North West achieved the most significant gains last year. It’s also interesting to read that 61% of semi-detached homes held or gained value in 2023, compared to just one in every two flats.
“Confidence in the market, which helps to solidify pricing, is being boosted by lenders competing fiercely on product rates – Moneyfacts recorded the biggest drop in two-year fixed rates since 2022 on Monday. However, the picture is more complex than this, with some rates being priced upward in line with swap rates over the last fortnight.
“Stronger product innovation and the growing shelf life of mortgage deals is also boosting buyer enquiries, as lenders try to find more ways to help as many borrowers as possible find solutions that work for them. The outlook for prices is promising for the year ahead, and we are optimistic that the positive trend seen in today’s figures will continue in the coming months. At Saffron, we are committed to helping as many people as possible buy or build their dream home, and to offering them reassurance, support and advice along the way.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“It’s a mixed bag for mortgage rates, with some lenders pricing downwards, as others edge rates upwards with little notice in order to balance service levels with increased demand for ‘best buy’ products. There are bound to be ups and downs ahead as there is still plenty of volatility, with the latest inflation figures suggesting that it could be a little longer before the Bank of England feels confident enough to make that first rate reduction.
“Swap rates, which underpin the pricing of fixed-rate mortgages, have been rising this past week and ticked up again today on the back of the inflation data, with five-year Swaps rising to 3.98 per cent compared with 3.84 per cent a week ago.
“Borrowers need to be mindful that if they like the look of a rate it might not be around for long so they should speak to a whole-of-market broker and take action. If rates have fallen again by the time they come to take out the mortgage, they should be able to switch to another, cheaper product at that time.”
David Reed, operations director at Richmond estate agency Antony Roberts:
“Since the start of the year, we are finding that the market for family houses in particular remains strong, with continued interest from potential buyers buoyed by new year plans.
“The pause in base rate hikes and subsequent decline in mortgage rates is certainly helping boost buyer confidence in the market.”
Arjan Verbeek, CEO of Perenna:
“House prices continuing to fall may be a welcome sign for those hoping to buy, but affordability still remains a huge barrier. The number of first-time buyers is at a 10-year low and there’s still no light at the end of the tunnel for aspiring homeowners.
“The UK mortgage market is flawed. House prices remain much higher than the average salary, despite today’s decrease, and even if prices continue to fall, lenders are still limiting consumers’ borrowing power. We need structural reform to rebuild the foundations for a housing market that is truly affordable and accessible. One solution is increasing the availability of flexible long-term fixes which allows consumers to borrow up to 30% more than high street lenders. It’s now more important than ever to open the market up to alternative products and give everyone a chance to own a home. The housing market needs a breath of fresh air.”
Rosie Hooper, chartered financial planner at Quilter Cheviot:
“The December 2023 government house price index shows a housing market that a couple of months ago was on course to rebound in 2024, but this now looks less clear amidst fluctuating mortgage rates seen this week. The latest figures show a month-on-month change of 0.1%, though with an annual adjustment of -1.4%, setting the average property value in the UK at £284,691.
“This update comes as mortgage rates have seen recent shifts, increasing after a period of welcomed decline. These changes are crucial for understanding the market’s current mood, as the earlier decrease in rates offered a glimmer of hope to prospective buyers, fostering a competitive atmosphere among lenders despite broader economic pressures. These conditions have been illustrated by today’s increased index.
“The recent uptick in mortgage rates might signal a more cautious period ahead. The increased borrowing costs could dampen the momentum of house price rises, prompting potential buyers to rethink their plans in a tighter mortgage market. This adjustment could slightly cool a market that has otherwise demonstrated resilience in the face of significant economic challenges.
“The small mortgage rate increases of this week will take a while to feed through in the market and may end up being a flash in the pan. If so, the outlook for 2024 still carries a hint of optimism. The ongoing competition among lenders and serious lack of housing supply is likely to keep house prices buoyant and if and when interest rates are cut, it’s likely the property market will be off to the races again.
“For those facing the end of their long-term, fixed-rate deals, the current market underscores the value of professional mortgage advice as rates change so quickly that advisers can spot new deals and get prospective buyers and those remortgaging the best rates before they lock in.”
Chris Little, chief revenue officer, finova:
“The slight lag in today’s figures reflect the higher borrowing costs, and subsequent weaker demand from buyers towards the second half of 2023. Although many buyers naturally put their purchase plans on hold due to these financial constraints, the outlook for the new year is much brighter. It may still be some time before we witness a strong market recovery, but thanks to stabilising swap rates and lower inflation, there is certainly the expectation that a more even balance between supply and demand will drive activity well into 2024. The mortgage ‘price war’ is already heightening the level of competition between lenders, who will be battling to both retain and win new business in the coming months.
“As the competition intensifies, and borrowers resume their purchase plans, lenders will be leaning on technology to facilitate both a smooth and efficient property transaction for their customers. Whether that’s investing in a new pricing engine to respond to market changes at pace, and offer personalised rates, or migrating to a new banking platform to self-serve product changes, lenders must invest in these tools early on to stay on top of their game.”
Richard Harrison, head of mortgages, Atom bank:
“The news of a 1.4 % decrease in house prices in December will come as little surprise.
“A seasonal dip in asking prices is always expected in the lead-up to Christmas, and the final month of 2023 saw vendors becoming increasingly competitive, reducing their pricing in the hope of closing a sale before the New Year.
“Likewise, higher mortgage rates and stretched affordability for some buyers may have motivated them to offer below the asking price, in a bid to offset the impact of higher borrowing costs.
“More recent indicators point to increasing house prices as confidence in the market improves, and we should see this reflected in future ONS data. The festive period was in fact a turning point, with more than 10,000 new properties coming to the market on Boxing Day – the biggest number of new sellers in one day since 2011, according to Rightmove.
“This increased activity was also met by heightened demand, with new buyer enquiries at their strongest in almost two years in January, the latest figures from the Royal Institution of Chartered Surveyors (RICS) show.
“Brokers have hit the ground running this year and while we have seen no movement in the base rate, lender competition has ensured the average two-year fixed rate continues to edge closer to 5%.
“A surprise uptick in business can catch lenders off guard, leading to a slip in service, and we have already seen a number of lenders pulling some of their best buy products to manage volume and protect service levels.
“With all the signs pointing to increased demand continuing, swift service will be key to delivering a good customer experience in 2024. Atom bank is committed to ensuring that speed and service remain our primary focuses as we head into what could be a busy year ahead.”
Nathan Emerson CEO of Propertymark:
“When the housing market has been through a disruptive period like it has over the last three years, it normally leads to a drop in house prices as people cannot afford homes in the same way they can during a period of economic growth.
“This drop will ease the pressure placed on people’s affordability and help them move home or step onto the property ladder.”
Nick Leeming, chairman of Jackson-Stops:
“The combination of falling inflation and a resilient jobs market is an encouraging sign after what many viewed as a subdued year of activity.
“The figures published today cover the end of 2023, and while a further dip in house prices is unwelcome, it is unsurprising for the time of year when we look at the wider trend over the final quarter.
“Across the Jackson-Stops network, Q4 saw an average of eight buyers for each available property, which demonstrates the supply challenges that are still underpinning market forces for those committed to moving.
“While the extremes of the pandemic property period have been firmly left behind, the reality of a more balanced picture has positioned the market well for a steadier start to 2024.
“In January across our network, we have started to see a modest buzz from buyers reigniting their searches, buoyed by greater clarity on mortgage rates and easing affordability.
“On a regional and local market level, the picture varies with differing stock levels and demand dictating buyers and seller activity.
“Though, for sellers looking to clinch a sale there are certain must-haves that will always remain in high demand creating hot pockets throughout the country, including proximity to outstanding schools, reliable transport links, and easy access to local amenities.
“For this reason, the home counties, namely Surrey and Kent, remain popular locations for buyers, but are also places where people are reluctant to leave once they’ve found their perfect property making demand even greater.
“The market will eagerly wait to see how the year plays out, while a good start to the new year is positive, it is too soon to determine whether if the year will strike the same note throughout.
“The reality of a changeable economic picture, a possible change of Government, and subsequent changes in housing policy, makes the role of estate agents even more important to help buyers and sellers navigate a continually shifting landscape.”
Ruth Beeton, co-founder of Home Sale Pack:
“Property values remain close to historic highs and while they may have seen a marginal annual reduction during the final months of last year, the market has weathered the wider storm of economic instability, higher interest rates and a reduction in buyer activity.
“Of course, this period of prolonged market instability has left its mark and the challenge facing many sellers isn’t the price they can achieve for their home, but the time it’s taking to reach completion.
“The best advice is to remain on the front foot with every aspect of your transaction and opt for the buyer in the strongest position to proceed to give you the very best chance of a swift sale.”
Jason Harris-Cohen, CEO of Open Property Group:
“A monthly uplift in house prices during December, regardless of how marginal, is a very promising sign given the usual seasonal lull.
“This slight increase provides the first evidence that the mortgage market resurgence in both approvals and approval based house price growth is starting to filter through to sold prices.
“The further positive to take is that while sold prices had been in decline since the summer, this is very much the ‘light at the end of the tunnel’ phase of this brief house price correction.”
Colby Short, co-founder and CEO of GetAgent.co.uk:
“While a retrospective look at sold prices may make for worrying viewing given the consistent annual reductions seen towards the end of last year, the nation’s sellers can rest assured that these prices were agreed many months ago and the market has already turned a corner in 2024.
“Another hold on interest rates has helped to bring further stability and buyers have been returning to take advantage of lower mortgage rates.
“This demand should only build with the base rate expected to be cut this year and, as it does, sold prices will start to climb further.”
Verona Frankish, CEO of Yopa:
“Where sold prices are concerned, both the annual and monthly rate of house price growth has been in decline since last summer but we’re now seeing signs of a stabilising market with the first positive monthly rate of growth.
“What’s more, there’s growing confidence that there’s more positivity to come on the horizon.
“We’ve seen mortgage approved house prices from the likes of Nationwide and Halifax climb consistently in recent months demonstrating that buyer demand is on the up and it’s only a matter of time before this uplift in mortgage market activity starts to cultivate further positive growth with respect to sold price values.”
Marc von Grundherr, director of Benham and Reeves:
“The decline in house prices seen during the latter stages of 2023 has been marginal in the grand scheme of things and they remain there or thereabouts when compared to the record peaks seen during the pandemic market boom.
“Of course, the London market has naturally been hit the hardest given the far higher cost of homeownership and the greater borrowing requirements will also mean that it trails the rest of the nation when it comes to a rebound in positive property price growth.
“However, when it does turn, it turns quickly and it’s only a matter of time before the sleeping giant of the UK property market awakens.”
Gareth Lewis, managing director of property lender MT Finance:
“These are the figures we were expecting, with a flat market and decrease in transactions resulting in softening values. It is no surprise given fluctuating rates and product availability last year.
“Since then we have seen more consumer confidence, which has meant agents are busier, people are looking to transact and having conversations about buying and moving.
“As the next set of data comes through, we should see transactional volumes improve and values edge up as ultimately there is more demand. What we don’t want to see is values go too high or too fast – the market needs a period of relative calm so that buyers and sellers can get back to transacting property in a measured way.
“The inflation data is encouraging as it was expected to creep up but for it to stay the same, given the timing and after Christmas when people were spending money, that’s a good place to find ourselves in. Hopefully, inflation will continue to edge downwards. Swap rates are ticking upwards so lenders are pulling products but this is partly down to them returning to the market at the start of the year wanting to fill pipelines and pricing quite aggressively. Hopefully, Swaps will settle which will help with desire and confidence to transact.”
