Confidence returns to the UK’s prime housing markets after a turbulent year

Nearly all prime housing markets in the UK have experienced an easing in price falls over the final quarter of 2023, Savills reveals.

This comes after a turbulent year when prime regional house prices fell by just -0.8% in the quarter, an improvement on the -1.5% seen in both Q2 and Q3 2023.

This leaves values down -4.8% year on year and -6.1% from their Q3 2022 peak.

Prime central London, values fell

In prime central London, values fell a marginal -0.2% in the final quarter of the year, an improvement of -0.5% in Q3.

This market has remained markedly more resilient – with annual falls totalling just -0.8% on average.

While domestic outer prime London markets closed the year down -1.2%.

‘Source of buyers funding has become a key determinant’

Frances McDonald, director, Savills residential research, said: “The source of buyers funding has become a key determinant in the performance of micro markets.

“Broadly speaking, the prime markets are less reliant on borrowing than the mainstream and more responsive to sentiment.

“These results point to a market that has all but levelled out, something that could happen in the first few months of 2024, ahead of their mainstream equivalents, unless we see a major shift in policy.”

Only market not forecast to experience a dip

Prime central London is the only market not forecast to experience a dip in values in 2024.

Price growth of 3.5% is expected in 2025 as the global economy picks up more significantly and any domestic political instability that the next general election causes subsides.

Ms McDonald said: “With values still well below historic peaks, prime central London represents a ‘buy’. Recovery looks well overdue though at around 19% in the five years to 2028, we expect it to be much less aggressive than in previous cycles.”

One firm of estate agents are optimistic about 2024

Meanwhile, when the agents in the Fine & Country estate agency network were asked to rate their experiences of 2023 and provide expectations for 2024, the agents rated 2023 as being 6.82 out of 10, and a notable 8.49 outlook for 2024.

Nicky Stevenson, the firm’s managing director, said: “Based on the feedback we have received from the network, it is safe to say our agents are optimistic about the year ahead but are realistic about the fact that next year will not be without its challenges.

“While many have experienced a more challenging market during 2023, most believe that 2024 will be a better year and are excited about the potential opportunities that lie ahead.”

‘Sellers will need proactive agents’

She added: “Sellers will need proactive agents with the tools to maximise their sale price and Fine & Country agents know they can achieve this for their clients.”

Despite the challenges experienced this year, there were some positive aspects such as more stock coming to market in 2023, and some offices expanded their market share.

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