UK house prices fell by 1.8% in 2023, research shows
According to the Nationwide house price index, activity within the property market was reported as weak last year, so here’s hoping for a better 2024.
Throughout 2023 the Bank of England consistently increased interest rates in an attempt to tackle growing inflation figures. Although this may have helped the UK avoid a recession, Nationwide have pinned higher mortgage borrowing costs as the reason why house prices dropped.
It has been found that almost all regions in the UK were affected by the reductions. England registered a 2.9% drop and house prices in Wales fell down to 1.9%. However, in Northern Ireland property costs increased by 2.9% and Scotland recorded a slight growth of 0.5%.
Altogether, prices ended 2023 down 1.8% compared with December 2022 and are now 4.5% below their all-time high, which was recorded in late summer in 2022.
Despite people being hopeful that this year will paint a more positive picture, Nationwide expects prices to remain flat or fall slightly.
Nationwide’s chief economist, Robert Gardner, said: ‘Housing market activity was weak throughout 2023.
‘Even though house prices are modestly lower and incomes have been rising strongly, at least in cash terms, this hasn’t been enough to offset the impact of higher mortgage rates, which in recent months were still more than three times the record lows prevailing in 2021 in the wake of the pandemic.
‘As a result, housing affordability has remained stretched.’
On top of this, Robert claimed that a person on the average UK salary buying their first home with a 20% deposit would have to pay the equivalent to 38% of their take-home pay – much higher than the long-term average of 30%.
Although Robert has agreed that prices are unlikely to bounce back this year, he has claimed that mortgage rates could reduce, boosting affordability, as investors bet that the Bank of England has raised rates far enough and will reduce the vase rate in forthcoming years.
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