The housing market is expected to stage a recovery in 2024 after average UK house prices fell by only £4,000 last year, according to official figures. The price of the average home decreased by 1.4% in the 12 months to December 2023, an improvement on an annual fall of 2.3% recorded in November, the Office for National Statistics said.The figures suggest that a slowdown in the housing sector in 2023 triggered by rising mortgage costs may be over, and a downward trend in house prices has bottomed out.
After gains of more than 20% since 2020 that added more than £60,000 to the average UK house price, the latest figures show an annual drop of £4,000 to £285,000 in December. Prices hit a peak of £291,100 in the autumn of 2022. Pent-up demand from cash buyers and first-time buyers who can access much cheaper mortgages than they could in 2023 is expected to push up prices back towards their peak this year, according to many economists.
The Bank of England is forecast to cut interest rates this year from 5.25% to 4.5%, prompting lenders to cut their latest two- and five-year fixed-rate mortgage offers.Gabriella Dickens, a UK economist at Pantheon Macroeconomics, said: “We expect the official measure to follow the Nationwide measure and start to rebound, as the fall in mortgage rates and recovery in real incomes boosts affordability.”
England had the highest average prices of all the UK nations and it experienced the biggest fall last year, down 2.1% to £302,000. Property values in Wales fell by 2.5%.Scotland had the lowest average price and a rise in prices of 3.3% to £190,000, closing the gap in prices across the UK.The north-west of England had the highest annual percentage change in 2023 – up 1.2% – while the lowest was in London, at -4.8%.
While house prices dipped in 2023, private rents continued to soar. In the two years before March 2020, when the coronavirus pandemic forced the government to lockdown the economy, rental inflation averaged 1.5%. Since then, rental costs have jumped year on year before levelling off at 6% over the last four months of 2023.
