Recent house price rises give hope for improved 2024 - new analysis

A house price index has indicated a gentle rise in capital appreciation coming through at the end of 2023, and says this may be a good sign for the year ahead.

Richard Sexton, director at e.surv - the company which commissioned the index -  comments: “On a monthly basis house prices have risen, in this instance by some £550, or 0.2 per cent, in December 2023, and now stand at a level last seen in February 2022. The continued fall in the rate of inflation and its subsequent impact on mortgage pricing is slowly beginning to feed into the housing market.

“The annual average sale price of homes in England and Wales that were sold and completed in December fell by some £13,150 or down 3.5 per cent, a reduction in November’s rate of [down] 3.7 per cent.

“Our data includes all transactions whether using cash or mortgage finance so gives a reliable picture of what is actually happening across the entire market. This shows us that this is the first time in the last 16 months in which the annual rate has improved over the previous month.

“Looking forward, with no further anticipated interest rate rises predicted (and indeed cuts perhaps from as early as May) and the prospect of a pre-election budget that will to some degree address housing market woes, we can expect borrowers to continue to benefit from lower mortgage rates as lenders fight for market share in a recovering market.”

The e.surv analysis shows that average house prices rose by some £550 or 0.2 per cent last month - only the third month in 2023 in which the average house price increased. The average house price at the end of the year was estimated at £362,187, some £13,200 lower than a year earlier. 

However, as reported throughout 2023, this fall needs to be contrasted with the near £48,350 increase in prices that has taken place since the first pandemic lockdown in March 2020 – most owners are therefore still likely to have gained considerable equity in their property over this period, despite the price falls that have occurred later in 2023.

In November 2023, prices rose on a monthly basis in 47 of the 111 Unitary Authority areas, which is 14 more than in October - e.surv suggests that this may indicate improved confidence in the various housing markets across England and Wales. The area with the biggest increase in prices in November was Rutland, up by 3.5 per centr, but low transaction counts may have unduly influenced the data.

At the other end of the scale, the authority with the largest fall in prices in November was Blaenau Gwent, where prices fell by 3.5 per cent. All existent property types in Blaenau Gwent (there were no flat sales) saw a reduction in their average prices during November, particularly terraced, with the average price of a terraced home in Blaenau falling from £120,000 to £114,000 in the month.