9 January 2024 – 2023 was a tough year for the property market. With an unstable mortgage market, where rates went on a rollercoaster ride, demand was subdued. Many commentators were predicting property prices to decline as a result. But have house prices fallen or have they risen in 2023?
House prices are often seen as a reliable indicator of the health of the property market. And while not infallible, they can offer an insight into how confident sellers and buyers are in the market.
The last year was not the best in terms of confidence in the market. Rising mortgage rates and high inflation has forced many people to put their plans to buy a new home on hold.
There was much speculation how the year will end regarding prices, with many predicting that they will fall. Now that we have data from several industry insiders, can we determine whether house prices have fallen or risen in 2023?
Halifax Announces Slight Rise In House Prices in 2023
After Nationwide and Rightmove, Halifax has released its latest House Price Index for December 2023. The data shows that house prices have risen by 1.1% compared to November last year.
According to the lender’s figures, this is the third monthly price rise in a row, pushing up the average UK house price to £287,105.
Year-on-year, Halifax’s House Price Index suggests that house prices have risen by 1.7% in 2023, compared to 2022. This means house prices were £4,800 higher in December than in December the previous year.
However positive these figures appear, they contradict data from Nationwide and Rightmove.
Nationwide’s House Price Index for December 2023 showed that house prices have stagnated on a monthly basis in the final month of the year. Compared to December 2022, house prices have fallen by 1.8%.
Rightmoves’ final House Price Index of 2023 also says the year has ended with a decline in house prices by 1.1% compared to the year before. Their data put the monthly house price decline in December at 1.9%, compared to November.
So what’s going on? Have house prices fallen or risen? The difference is down to the use of different datasets.
Halifax and Nationwide are likely to base their figures on data from properties bought with their mortgages, Rightmove uses property prices from all properties listed on their portal.
As such, Rightmove’s data seems to be the most complete. However, not all properties are listed on the portal. This means that all these figures have to be taken with a pinch of salt.
The most complete data to establish if prices have risen or fallen comes from land registry data. So we will have to wait for the Office forNational Statistics’ House Price Index to know for sure, which will be released mid to end of January.
But the likelihood is that house prices will have fallen by around 1% at the end of December 2023 compared to the previous year.
Predictions For Next Year
While the currently available data doesn’t help to definitively answer the question of have house prices fallen or risen, there is more consensus about what direction prices will go this year.
Most commentators, including Rightmove and Nationwide, agree that house prices are likely to decline in 2024. Even Halifax believes that house prices will drop by between 2% and 4%.
Despite mortgage rates having come down recently as lenders compete for borrowers, mortgage rates are still at an elevated level. Inflation is also slowing, but prices for many everyday items are still high, putting pressure on many household budgets.
The current economic uncertainty will likely continue into 2024, keeping many buyers and sellers cautious.
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.
Kim Kinnaird, Director at Halifax Mortgages
So while there are positive signs, it’s too early to say if the housing market will recover and regain its strength next year.
Our Opinion
When looking at figures from different companies, it pays to consider the datasets they use. Apart from official figures, such as the ones from the ONS, most aren’t complete and don’t show the whole picture.
When it comes to the property market and house prices, it’s also worth remembering that the picture looks different in different parts of the country.
The property market consists of many micro-markets that perform differently from each other. While overall house prices have fallen year-on-year in the UK, there are parts where they have actually risen.
So while these national figures can give you an indication of the direction of the market, it’s always good to look in more detail at the region you are interested in.
Speaking to a local agent will give you a better idea of how the market is performing in the area you want to buy or sell a property.
