The latest figures from the Office for National Statistics (ONS) reveal a 1.4% decrease in average UK house prices over the year to December, with a modest month-on-month fall of 0.3% when adjusted for seasonal factors. The average property value has dropped to £285,000, a £4,000 decline over the year. London experienced a sharper fall, with average prices down by 4.8% to £508,000. Decreases were seen across all property types, notably terraces and flats, which decreased by 2.5% and 2.3%, respectively. In contrast, the price of new-build homes surged by 9.4%.
Sarah Coles, head of personal finance at Hargreaves Lansdown, reflects on the year’s challenges and the emerging optimism as 2023 closed. “2023 was a tough year for property, but there was a glimpse of hope as it drew to a close,” she comments. This hope was spurred by reduced mortgage rates, encouraging a return of buyer interest at the beginning of 2024. Despite this optimism, Coles warns against complacency, noting that mortgage rates have plateaued, with potential increases on the horizon due to economic factors such as robust wage growth and higher services inflation.
With the UK on the cusp of a recession and potential increases in redundancies, Coles advises buyers to maintain a financial safety net. “It’s vital not to get carried away,” she adds, suggesting the importance of emergency savings in an unpredictable market.
Nathan Emerson, CEO of Propertymark, and Emma Cox, MD of Real Estate at Shawbrook, also shared their insights. Emerson highlighted how economic downturns typically lead to lower house prices, potentially easing affordability pressures. Cox pointed out the downturn in property activity at the end of 2023 but observed a more positive outlook for 2024, driven by reduced mortgage rates. She advises landlords to consider diversifying their portfolios in response to market challenges, noting strong demand for commercial finance products and an overall optimistic outlook for the property market.
ONS House price data for December was released today: UK House Price Index – Office for National Statistics (ons.gov.uk)
