"The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand."
- Kim Kinnaird, director of Halifax Mortgages
Average house prices rose by 1.1% in December, the third consecutive monthly rise, according to the latest Halifax house price index.
As a result, its figures show that property prices grew by 1.7% overall in 2023, in contrast to Nationwide's index which shows house prices ended 2023 1.8% below December 2022.
Despite this, Halifax still predicts that house prices will fall by between -2% and -4% in 2024.
National and regional house prices
The Halifax data shows that Northern Ireland continues to be the strongest performing nation or region in the UK, with house prices increasing by 4.1% on an annual basis. Properties in Northern Ireland now cost on average £192,153, which is £7,595 higher than the same time in December 2022.
Scotland’s average house price also recorded growth, with the average property in the nation now £205,170, 2.6% higher or £5,277 in cash terms on an annual basis.
The North West (+0.3%), and Yorkshire and Humber (+0.1%) also saw modest house price increases over the last year.
The South East fell the most during 2023, when compared to other UK regions, with homes selling for an average £376,804 (-4.5%), a drop of £17,755.
Unsurprisingly, London retains the top spot for the highest average house price across all the regions, at £528,798, albeit prices in the capital have declined by -2.3% on an annual basis.
Kim Kinnaird, director of Halifax Mortgages, said: “In December, the cost of an average UK home rose for the third month in a row to £287,105, up 1.1% or £3,066, compared to November, reaching the highest level since March 2023.
“The housing market beat expectations in 2023 and grew by 1.7% on an annual basis. The average property price is now £4,800 higher than it was in December 2022. Whilst it’s encouraging that we saw growth in the last three months of the year, this was preceded with property price falls for six consecutive months between April and September. The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand. That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.
“As we move through 2024, the UK property market will continue to reflect the wider economic uncertainty and buyers and sellers are likely to be naturally cautious when considering making a move. While wage growth is now above inflation, helping to ease cost of living pressures for some and improving housing affordability, interest rates are likely to remain elevated for as long as inflation remains markedly above the Bank of England’s target. Our latest forecast suggests house prices could fall between -2% and -4% during the coming year, although, as with recent years, forecast uncertainty remains high given the current economic climate.”
Nicky Stevenson, managing director at national estate agent group Fine & Country, commented: “What a difference a year makes, as it was only 12 months ago when forecasts projected steep falls for house prices.
“Although there is a huge disagreement between Halifax’s 1.7% price rise for the year and Nationwide’s 1.8% fall, the property market has performed far more strongly than many analysts predicted.
“There are many reasons for optimism as we head into the new year. Economic stability is encouraging lenders to offer increasingly competitive mortgage rates, widening affordability for buyers and driving activity. Many buyers are highly motivated to move, having held off on their plans while waiting for the economy to improve.
“Their patience is being rewarded, and they are benefiting from greater availability of properties. The post-Christmas period is seeing a spike in sellers keen to capitalise on the momentum generated by falling inflation and the rise in consumer confidence.
“If mortgage lenders continue to bring down rates while they compete for business, then greater numbers of first-time buyers could soon be back on the march, helping to re-invigorate that portion of the market too.”
