According to Nationwide UK house prices ended in 2023 1.8% down even though mortgage rates have plummeted.
The average house price remained unchanged in December which means that by the end of 2023 the average house price is 4.5% below the all time peak of the summer 2022.
Nationwide said that in December the average house price was £257,443. The cost of borrowing soared over the past two years due to the Bank of England raising interest rates.
“Housing market activity was weak throughout 2023,” said Nationwide’s chief economist, Robert Gardner.
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“The total number of transactions has been running at (about) 10% below pre-pandemic levels over the past six months, with those involving a mortgage down even more (about 20%), reflecting the impact of higher borrowing costs.
“On the flip side, the volume of cash transactions has continued to run above pre-Covid levels.”
Gardner added, “A rapid rebound in activity or house prices in 2024 appears unlikely.
“While cost-of-living pressures are easing, with the rate of inflation now running below the rate of average wage growth, consumer confidence remains weak and surveyors continue to report subdued levels of new buyer inquiries.
“Moreover, while markets are projecting that the next Bank Rate move will be down, there are still upward risks to interest rates. Inflation is declining, but measures of domestic price pressures remain far too high.”
Matt Thompson, head of sales at Chestertons, said, “Our offices registered 34% more buyers making an offer in November compared to the same month last year.
“A lot of this is driven by pent-up demand and house hunters feeling more confident following the announcement of interest rates remaining at 5.25% for the time being.
“We forecast for UK house prices to experience a slight decline of -0.3% over 2024, while London prices will show growth of 1.8% due to the higher number of cash buyers that are less affected by interest rates.
“The prospect of a slightly stronger economic outlook from 2025 feeds through to a more meaningful uplift in house prices. We forecast that this will result in growth of between 3.5% and 4.5% across London and the UK. However, we caution that any house price growth is more likely to be slow and steady rather than spectacular.”
Chestertons has forecasts that UK house prices will experience a slight decline of -0.3% over 2024, while London prices will show growth of 1.8% due to the higher number of cash buyers that are less affected by the higher interest rates.
The prospect of a slightly stronger economic outlook from 2025 feeds through to a more meaningful uplift in house prices.
The agency forecasts that this will result in growth of between 3.5% and 4.5% across London and the UK. However, any house price growth is more likely to be slow and steady rather than spectacular.
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