London recorded the lowest price growth of any region in England in the year to January 2023, according to the Office of National Statistics (ONS). House prices in the capital remain the most expensive of any region in the UK, with the annual increase of 3.2 per cent in January taking the cost of a home to £534,000 on average.
As the housing market and mortgage borrowers continue to adjust to the impact of the cost of living crisis and higher interest rates, forecasters still believe London prices will likely fall by between five and 10 per cent this year.
The region to have performed best for house price growth was the North East, where prices increased by 10 per cent in the year to January 2023. House prices in the North East now average £163,000, the lowest of any region.
Across the UK, annual house price growth has slowed to 6.3 per cent. The average cost of a UK home is now £290,000 which is £17,000 higher than in January 2022. Tom Bill, head of UK residential research at Knight Frank, said, “January’s drop in annual house price growth tells us a lot about the detrimental impact of the mini-budget but very little about how the UK property market will perform this year.”
After effectively switching off for the final quarter of 2022, demand and supply have been solid this year and sales volumes will eventually catch up against an economic backdrop that is proving stronger than expected. Meanwhile, private rental prices in London increased by 4.6 per cent in the 12 months to February 2023, accelerating from a 4.3 per cent rise in the 12 months to January 2023. This is the strongest annual percentage growth in London since January 2013.
Rental prices paid across the UK increased by 4.7 per cent in the 12 months to February 2023 which is the largest growth since comparable records began in January 2016. Annual house price inflation, measured using final transaction prices, slowed again in January, consistent across all nations and regions. UK rental prices continued to climb, with the strongest growth since records began in 2016. The surge in London’s rents remained evident with the highest annual percentage increase in over a decade.
The average house price in Scotland increased by one per cent over the 12 months to January 2023. The average house price in Scotland was £185,000 in January 2023. Annual house price inflation in Scotland has generally been slowing since a recent peak of 13.8 per cent in the 12 months to April 2022. The typical house price in Wales increased by 5.8 per cent over the 12 months to January 2023.
The average house price in Wales in January 2023 was £217,000. In England, the average property value increased by 6.9 per cent over the 12 months to January 2023. The average house price in England was £310,000 in January 2023. And in Northern Ireland, the average house price increased by 10.2 per cent annually, with the average house price there at £175,000.