Property market ended 2023 on a positive note

The UK’s housing market showed signs of recovery in December 2023, as house price falls slowed down and new-build values soared, according to the latest data from the Office for National Statistics (ONS).

The ONS reports that the average house price across the UK was £285,000 in December 2023, a drop of 1.4% from the previous year and 0.3% from the previous month, on a seasonally adjusted basis.

However, this was a smaller decline than in previous months, suggesting that the market was stabilising after a turbulent year.

London saw the biggest annual drop in prices, with the average property costing £508,000, a fall of 4.8% from December 2022.

All property types experienced a loss in value, with terraced houses losing the most (2.5%), followed by flats (2.3%).

However, new builds continued to defy the downward trend, with prices growing by 9.4% in a year to reach an average price of £348,000.

Made borrowing more affordable

Sarah Coles, head of personal finance at Hargreaves Lansdown, attributed the improvement in the market to the reduction in mortgage rates, which made borrowing more affordable for buyers.

She said: “2023 was a tough year for property, but there was a glimpse of hope as it drew to a close.

“House prices were still falling, but those drops decelerated after mortgage rates were cut.”

She added: “As cheaper deals hit the market at the start of 2024, optimism became more widespread, and some buyers were persuaded back to the market.”

However, she warned that buyers and sellers should not get carried away by the positive signs, as the market was still fragile and uncertain.

‘Don’t get dazzled by this flash of hope’

Ms Coles continued: “It’s vital that buyers and sellers don’t get dazzled by this flash of hope.

“Slower price falls in December reflect the fact that these sales were agreed when mortgage rates were falling.

“According to Moneyfacts, the average two-year fix hit a high point of 6.85% in August, before dropping back to 5.62% in January.

“The start of 2024 actually saw an air of optimism breeze into the market on the back of lower rates, and the Royal Institution of Chartered Surveyors says this has been enough to bring some buyers back to the market.”

‘House prices in the UK were broadly flat’

Emily Williams, the director of research at Savills, said: “Despite higher mortgage costs, house prices in the UK were broadly flat, bringing the total change in average values across 2023 to -1.4%.

“This resilience means that the total value of UK housing stock still remains £1.585 trillion higher than pre-pandemic (2019).”

She adds: “However, the areas with the greatest affordability pressures continue to show more significant price adjustments, with London and the South East registering annual falls of -4.8% and -4.6% respectively.

“Early indicators for January suggest that the market could be reaching a turning point.

“With several lenders cutting mortgage rates at the start of the year, the RICS survey has recorded net positive sentiment for new buyer enquiries for the first time since March 2022.”

‘Year finished with the average property worth £4,000 less’

Iain McKenzie, the CEO of The Guild of Property Professionals, said: “The results are in for 2023 and the year finished with the average property worth £4,000 less than it did in the previous year.

“This is a clear but modest readjustment in prices that will provide some relief to buyers, but also won’’ concern sellers that their home’s value has changed significantly.

“All signs currently point to a recovery in house prices this year, with inflation and interest rate rises levelling off and stability returning once again to the market.”

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