UK house prices fall between December and January

The average UK house price fell 1.1% between December and January, the latest Office for National Statistics (ONS) house price index reveals.

However, the average price was £289,819 – 6.3% higher than in January last year.

Using data from HM Land Registry, the ONS says that the average price of a new home climbed 6.7% between January and December and 22.3% year on year.

However, the average price being paid by a first-time buyer fell by 1.6% month on month versus -0.9% for former owner occupiers.

‘Continued slowdown in annual house price growth’

Emily Williams, the director of residential research at Savills, said: “Today’s ONS house price data shows the continued slowdown in annual house price growth.

“Average house prices fell for the second month in a row in January, although the annual growth figure remains positive, reflecting the strong growth seen in the first half of 2022.

“However, some markets continue to outperform. The North East saw a slight increase in average values between December 2022 and January 2023, reflecting the region’s limited exposure to mortgage affordability pressures.”

She adds that Savills is expecting that the regions furthest from London, and cash and equity rich buyers who don’t need to rely on borrowing, will be the strongest performers over the next five years.

‘January was a miserable month for property’

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “January was a miserable month for property. Three months on from the peak of mortgage rates in October, the horror of higher mortgages fed through into falling prices.

“Prices were down more than 1% in a month, and annual growth is now just 6.3%.

“We can expect more weakness from here, as prices continue to fall, but the jury is still out on how low things will go.”

Ms Coles points out that affordability calculations have taken a toll on buyer confidence with the average full-time employee in England spending 8.3 times their annual income in order to buy a typical home – and having to take on ever-larger mortgages.

‘Wider economy paints a more positive picture’

Nathan Emerson, Propertymark’s chief executive, said: “The ONS’s latest data reflects on deals agreed around the time of the disastrous mini-Budget and more up-to-date data coming from the market and the wider economy paints a more positive picture.

“In January, our member estate agents reported that the market had picked up pace with sales agreed up 50% from December.”

He added: “Serious buyers are still very much in the market and with more homes are coming up for sale, competition is considerably lower.

“Therefore, prices are returning back to far more sustainable levels than seen previously.”

‘Average price paid for a first home has fallen at a sharper rate’

The chief executive of Wayhome, Nigel Purves, said: “The average price paid for a first home has fallen at a sharper rate than the wider market, while the annual rate of growth also remains lower, and this will be welcome news for the nation’s first-time buyers who face the toughest task when climbing the ladder.

“However, the average price of a first home remains 6.1% higher than it was just a year ago, which demonstrates the growing pressure being placed on the nation’s first-time buyers when it comes to the cost of homeownership.”

Jonathan Samuels, the chief executive of Octane Capital, said: “With the cost of borrowing continuing to increase, it’s no surprise that the purchasing power of the nation’s homebuyers has taken a hit and this has resulted in a string of small but consistent monthly house price reductions since last September’s mini-Budget.

“The general consensus is that we will see yet another base rate increase tomorrow, albeit a potentially smaller jump than previous hikes, and so the cost of climbing the property ladder looks set to get that little bit more expensive.”

Share This Article