The UK housing market displayed a resilient performance in 2023, with average house prices witnessing a rise for three consecutive months up to December, newly released data has revealed. This growth trajectory marks a significant turnaround from a period of decline earlier in the year and reflects the dynamic nature of the UK’s property market as it reacts to the economic conditions.
Consecutive Growth in the Latter Part of 2023
The Halifax House Price Index (HPI) reported a 1.1 per cent increase in average house prices in December, continuing the upward trend for the third month in a row taking the price of a typical UK home to £287,105, an increase of over £3,000 compared to the previous month. This upward movement is particularly noteworthy considering the broader economic climate.
The 2023 Overview
Throughout 2023, property prices grew by 1.7 per cent, with the average property price £4,800 higher than in December 2022. However, this growth was not consistent throughout the year, as there were property price falls for six consecutive months between April and September. Halifax’s researchers say the latter part of the year’s growth is likely attributed to a shortage of properties in the market rather than an increase in buyer demand. The easing of mortgage rates towards the year’s end may also have played a role in bolstering buyer confidence.
Regional Variations
The UK housing market witnessed varied performances across different regions:
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- Northern Ireland recorded the strongest house price growth at 4.1 per cent, with average prices reaching £192,153.
- Scotland saw a 2.6 per cent increase, with the average property priced at £205,170.
- The South East of England experienced the most significant decline, with a 4.5 per cent drop taking average prices to £376,804.
- Despite a 2.3 per cent annual decrease, London maintained the highest average house price across all regions at £528,798.
Housing Activity in 2023
According to data from the HMRC and the Bank of England, the UK housing market activity showed a decrease in home sales but an increase in mortgage approvals in November 2023. This contrast reflects the complex interplay of economic factors influencing the market currently.
Predictions for 2024
Looking ahead to 2024, Halifax forecasts a potential fall in house prices, ranging between -2 and -4 per cent. This outlook aligns with broader economic uncertainties and a cautious approach from both buyers and sellers. However, with wage growth now surpassing inflation and easing cost of living pressures, there’s an air of cautious optimism for the housing market.
In fact, the Halifax HPI data paints a picture of a housing market that has weathered various challenges through 2023 and is entering 2024 with cautious optimism. The potential for a price correction in 2024 highlights the reactive nature of the UK housing market. With this in mind, investors will need to stay attuned to these trends as they navigate the market in the coming year.
