The housing market “beat expectations” in 2023, with the average UK property value ending the year £4,800 higher than it had been at the end of 2022, according to an index.
Property values increased by 1.7% on average across 2023, Halifax said.
Average house prices rose by 1.1% month-on-month in December, the third monthly rise in a row.
The typical UK house price in December 2023 was £287,105, up from £282,305 in the same month a year earlier.
The housing market beat expectations in 2023
Kim Kinnaird, Halifax Mortgages
Kim Kinnaird, director, Halifax Mortgages, said: “In December, the cost of an average UK home rose for the third month in a row to £287,105, up 1.1% or £3,066, compared to November, reaching the highest level since March 2023.
“The housing market beat expectations in 2023 and grew by 1.7% on an annual basis. The average property price is now £4,800 higher than it was in December 2022.
“Whilst it’s encouraging that we saw growth in the last three months of the year, this was preceded with property price falls for six consecutive months between April and September. The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand.
“That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.”
She continued: “As we move through 2024, the UK property market will continue to reflect the wider economic uncertainty and buyers and sellers are likely to be naturally cautious when considering making a move.
“While wage growth is now above inflation, helping to ease cost-of-living pressures for some and improving housing affordability, interest rates are likely to remain elevated for as long as inflation remains markedly above the Bank of England’s target.
“Our latest forecast suggests house prices could fall between 2% and 4% during the coming year, although, as with recent years, forecast uncertainty remains high given the current economic climate.”
While some parts of the UK recorded house price rises last year, others saw property values fall.
The report also said that, in Northern Ireland, house prices increased by 4.1% annually, while in the South East of England, they fell by 4.5%.
Increased competitiveness among lenders leads to lower mortgage rates and we find ourselves in the midst of a price war
Mark Harris, SPF Private Clients
Many lenders have been chopping fixed mortgage rates in the new year.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Increased competitiveness among lenders leads to lower mortgage rates and we find ourselves in the midst of a price war.
“With HSBC launching the headline-grabbing 3.94% five-year fix and reductions from Halifax, NatWest, TSB and other lenders, the gloves really are off.”
Riz Malik, founder at Southend-on-Sea-based broker, R3 Mortgages told website Newspage: “In the coming weeks, we should gain clarity on the borrowing environment for 2024 as lenders rush to adjust rates in response to economic conditions. Although it may take some time, optimism is expected to rebound sharply among potential movers.”
Nicky Stevenson, managing director at estate agent group Fine & Country said: “If mortgage lenders continue to bring down rates while they compete for business, then greater numbers of first-time buyers could soon be back on the march, helping to re-invigorate that portion of the market too.”
Nathan Emerson, chief executive at property professionals’ body Propertymark said: “We would now hope that the the Bank of England gradually starts slashing interest rates in order to further to stimulate growth in the housing market.”
Alice Haine, personal finance analyst at Bestinvest, said: “While confidence is returning to the UK’s property market, it is still very early days.
“Borrowing costs remain far higher than they were before the Bank of England began hiking interest rates at the end of 2021, so there is still a risk of mortgage arrears rising from here.”
Matt Thompson, head of sales at London-based estate agent Chestertons, said: “December tends to be a quieter time of year in terms of property transactions but, last month, buyers have been more motivated to continue their search. Pent-up demand caused by last year’s economic uncertainty has been a key reason for this spike in buyer activity and indicates that 2024 will see a rather active property market.”
Here are average house prices across the UK and annual changes in December 2023, according to Halifax. Regional annual change figures are based on the most recent three months of approved mortgage transaction data:
East Midlands, £234,578, minus 2.6%
Eastern England, £325,634, minus 3.5%
London, £528,798, minus 2.3%
North East, £168,274, minus 0.9%
North West, £226,765, 0.3%
Northern Ireland, £192,153, 4.1%
Scotland, £205,170, 2.6%
South East, £376,804, minus 4.5%
South West, £293,067, minus 3.9%
Wales, £216,730, minus 0.5%
West Midlands, £247,122, minus 1.4%
Yorkshire and the Humber, £204,904, 0.1%
