UK House Prices Fall 1.8% in 2023, a Rapid Rebound ‘Appears Unlikely’

UK house prices dipped 1.8% in 2023, the latest data from the Nationwide House Price Index revealed on Friday, while month-on-month they remained flat.

House prices are down from a year ago, with Northern Ireland and Scotland the only parts of the UK to see prices increase in 2023. The weakest performing region was East Anglia, with prices in the region down 5.2% over the year.

“UK house prices ended 2023 down 1.8% compared with December 2022, leaving them almost 4.5% below the all-time high recorded in late summer 2022,” said Robert Gardner, Nationwide's Chief Economist.

Month on month in December, prices were flat compared after considering seasonal effects, Nationwide said. The average house price in December 2023 was £257,443, compared with £258,557 in November 2023.

The housing market in the UK was weak throughout 2023, with Nationwide calculating that the total number of transactions has been running at around 10% below pre-pandemic levels over the past six months.

“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,” added Gardner.

The economic headwinds have resulted in housing affordability remaining stretching. According to Nationwide, a borrower earning the average UK income and purchasing a first-time buyer property with a 20% deposit will pay a monthly mortgage equivalent to 38% of take-home pay. This is above the long-term average of 30%.

While there have been some encouraging signs for the housing market recently, such as mortgage rates edging down, Nationwide believes a rapid rebound in activity or house prices in 2024 appears unlikely.

Despite cost-of-living pressures easing, they note that consumer confidence remains weak, and surveyors continue to report subdued levels of new buyer enquiries.