UK Housing Market Shows Resilience

A shortage of available properties further supported UK house prices over the last year, with many sellers holding off until the market stabilises and prices rebound.

Despite a 1% annual decrease in prices, Halifax characterised this drop as "relatively modest," given the economic challenges faced by consumers in the past 12 months. Average house prices still stand £40,000 above pre-pandemic levels, influenced by the Covid crisis, during which there was a rush to acquire larger homes.

Kim Kinnaird, the director of Halifax Mortgages, noted a recent uptick in mortgage approvals, suggesting increased activity levels due to improved affordability for homebuyers. “The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand. That said, recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely as a result of an improving picture on affordability for homebuyers.”

Second consecutive monthly rise in house prices amid eased mortgage rates.

Similarly, Kinnaird noted that the slight easing of mortgage rates has boosted buyer confidence, prompting more people to move forward with their home purchases. “With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases”.

However, Kinnaird cautioned against expecting a continued upward trajectory in house prices into the new year. Economic uncertainties, including inflation, the broader cost of living, overall employment rates, and affordability issues, are anticipated to exert downward pressure on house prices in the coming year.

Notably, Northern Ireland has experienced the most substantial increase in house prices over the last 12 months, with the average home now costing £4,294 more compared to the previous year, reaching £184,684.

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