More homes come to market as house prices hold steady
Buyers have a lot more choice when it comes to securing a home in 2024. More sellers are coming to market as mortgage rates are expected to plateau at 4% to 5%.
The number of homes available for sale is up 20% on this time last year, meaning much more choice for home hunters.
Meanwhile, house price reductions are lower than a year ago but remain above average, as house price falls continue to slow.
Annual house price inflation is currently at -0.5% year-on-year, up from the recent low of -1.4% recorded in October 2023.
Where can buyers find the biggest price reductions right now?
The biggest cuts to house prices (5% or more) are currently underway in the UK’s more expensive regions: the South East and East of England.
Five English regions are registering annual price falls of up to -2.1%, led by the East.
However, house prices have moved into positive territory in the remaining 4 regions of England, alongside Wales, Scotland and Northern Ireland - where prices have risen 4.3% in the last year.
Will mortgage rates come down in 2024?
Mortgage rates have fallen back to where they were a year ago, but they remain above 4% and are likely to plateau at this point for the foreseeable.
Our Executive Director of Research, Richard Donnell, says: ‘Mortgage rates could move a little lower over the year, but this hinges on the timing of future base rate cuts, which may come later in the year.’
Falling mortgage rates are important when it comes to boosting housing market activity, but lenders have recently been pulling mortgage deals below 4%.
‘The cost of finance used to fund mortgages has increased modestly in recent weeks,’ says Donnell. ‘Rising incomes are helping to offset the impact of higher borrowing costs, but at a slow pace.
‘Buyers should anticipate 4-5% mortgage rates over much of 2024.’
A three-speed housing market
Across the UK over the last 18 months, there has been a rapid slowdown of house price inflation, largely due to higher mortgage rates and cost of living pressures.
These factors have mainly hit prices in the more expensive areas of the UK, such as London and the South, while areas with more affordable housing, such as the North, have been less impacted.
The housing market has now become divided into three groups:
1) Southern England is registering the largest price falls
The East, South East and South West regions have been hit hardest by rising mortgage rates and reduced household buying power. Largely because the average home price here is £344,000, which is 30% above the UK average.
2) London is seeing the lowest price inflation
‘While it is the most expensive housing market with an average price of £534,000, London is a market that has registered much lower levels of house price inflation over the last seven years,’ says Donnell.
‘Affordability has been improving slowly over this time, opening the market up to more potential buyers than before.’
London is now in hot demand as a location, yet fewer sellers are coming to market in the capital (+7% year on year), compared to the rest of the UK (+21% year on year).
This means demand is outstripping supply, so house prices are holding steady in the capital, rather than falling as they are in the rest of Southern England.
3) The rest of the UK is seeing firmer pricing
‘Over the last 12 months, annual price falls have been very limited across the rest of the UK, where house prices are at or below the UK average,’ says Donnell, ‘because the impact on buying power from higher mortgage rates has been less pronounced.’
In fact, Scottish house prices have been rising in the last 12 months, while Northern England, the West Midlands and Wales are registering firmer pricing because they are more affordable. Consequently more sales are being agreed here.
Will the Budget have anything in store for buyers?
‘We don’t expect the Budget to have any specific measures that will boost market activity in the very short term,’ says Donnell.
‘There is a case to make permanent stamp duty changes for first-time buyers from the 2022 autumn budget.
‘But any longer-term measures such as the Mortgage Guarantee Scheme or small deposit mortgages will take longer to impact market activity, with much depending on the scale of the proposals.’
Key takeaways
- 20% more homes available for sale as sellers return to market
- House prices not expected to rise quickly in 2024
- 15% more sales are being agreed, boosted by falling mortgage rates, which are now plateauing
- There is a 3-tier housing market split between southern England, London and the rest of the UK
Sales agreed up 15% as buyers return to market
Buyers are back in market and demand is now 11% up on this time last year. This is good news for sellers, as the number of sales agreed climbs 15%.
Sales market activity continues to improve
Pent up demand is returning to the housing market as mortgage rates return to 4-5%, which is good news for sellers.
More buyers are looking to secure homes, with demand up 11% compared to this time last year.
But even more importantly, the number of sales agreed is also up 15% compared to early 2023.
This shows both greater buyer confidence and more realism on pricing by sellers.
North East and London lead the way in sales
In the North East, the number of homes going under offer is up +17% on this time last year, while in London 16% more homes have sales agreed.
Across the UK as a whole, more properties are now coming to market, with 21% more sellers putting up their For Sale signs than this time last year.
This, in turn, is increasing the choice of homes available for buyers and supporting sales for sellers.
Our Executive Director of Research, Richard Donnell, says: ‘The housing market has proved very resilient to higher mortgage rates and cost of living pressures.
‘More sales and more sellers shows growing confidence among households and evidence that 4-5% mortgage rates are not a barrier to improving market conditions.’
Are sellers still reducing their prices?
‘While increased activity levels are welcome news, it’s important to note that a small proportion of sellers continue to reduce asking prices to attract buyer interest,’ says Donnell.
However, sellers will be pleased to learn that fewer price reductions are now taking place, compared with this time last year.
Reductions are still above average right now, as higher mortgage rates continue to make buyers price sensitive, but discounts of 5% or more are mainly taking place in the South East and East of England.
What will happen to house prices in 2024?
‘There is clear demand from homeowners and first-time buyers looking to move and buy their first home in 2024,’ says Donnell.
‘This is going to support higher sales volumes, but we don’t expect higher house price growth.
‘The reality is that the housing market is still adjusting to higher mortgage rates and the impact of reduced buying power, which has varied across the country.’
This means that sellers will need to remain realistic on pricing, but the fact that their home is likely to attract more interest is good news, as it increases the chances of agreeing a sale.
‘The average estate agent is agreeing 6 new sales a month, up from 5.2 a year ago, which proves that house prices don’t need to fall to support sales,’ says Donnell.
This is feeding through into our UK house price index, which continues to record a slowdown in the rate of price falls.
Annual house price inflation is currently -0.5%, up from the recent low of -1.4% recorded in October 2023. And house prices are now 1.5% below their peak of £268,000 in October 2022.
What’s going to happen to mortgage rates in 2024?
Mortgage rates have fallen back to where they were a year ago, but they remain above 4% and are likely to plateau at this point for the foreseeable.
‘Mortgage rates could move a little lower over the year, but this hinges on the timing of future base rate cuts, which may come later in the year,’ says Donnell.
Falling mortgage rates are important when it comes to boosting housing market activity, but lenders have recently been pulling mortgage deals below 4%.
‘The cost of finance used to fund mortgages has increased modestly in recent weeks,’ says Donnell. ‘Rising incomes are helping to offset the impact of higher borrowing cost, but at a slow pace.
‘Buyers should anticipate 4-5% mortgage rates over much of 2024. But our consistently held view is that 5% mortgage rates are the tipping point for annual house price falls.
‘Mortgage rates over 6% for a sustained period would lead to larger double-digit price falls. Mortgage rates in the 4-5% range are consistent with flat to low single digit price rises.’
Will the Budget have anything in store for sellers?
‘We don’t expect the Budget to have any specific measures that will boost market activity in the very short term,’ says Donnell.
‘There is a case to make permanent stamp duty changes for first-time buyers from the 2022 autumn budget.
‘But any longer-term measures such as the Mortgage Guarantee Scheme or small deposit mortgages will take longer to impact market activity, with much depending on the scale of the proposals.’
Key takeaways
- Demand rises 11% and sales agreed are 15% higher than a year ago
- Sellers make a return with 20% more homes for sale than this time last year
- Activity is being boosted by falling mortgage rates, which are now plateauing
- We expect to see more sales in 2024, rather than faster price growth
Home buyers and sellers are back in market
Demand for homes up 11% as buyers and sellers return to market in growing numbers, boosting sales. Our Executive Director of Research, Richard Donnell, has the latest.
Buyer demand now 11% higher than last year
The first weeks of January got off to a strong start with activity spurred on by falling mortgage rates and pent-up demand from the second half of 2023.
Our latest data shows this momentum has been carried into the first half of February.
At a headline level, buyer demand is running 11% higher than this time last year. Buyer numbers are up across all parts of the UK but London is firmly out in front, followed by the North East and North West regions.
London’s housing market has lagged behind the rest of the UK for seven years since 2016 with low levels of house price growth due to stretched housing affordability.
The average value of a flat is just 13% higher than in 2016, compared to the UK average house price being 33% higher and up to 50% higher in Wales.
Better value for money is improving the prospects for London but it remains an expensive housing market.
A healthier market with more sales agreed
One of the best ways to assess the overall health of the housing market is to look at the trends in the number of sales being agreed.
If buyers and sellers are agreeing more sales then that shows a healthier market, with people able to fulfil their home moving ambitions.
The fact we have almost a fifth more homes for sale than a year ago is helping, providing buyers with more choice and boosting the chances of sales being agreed.
Our latest data shows sales agreed are up across all regions and countries of the UK and more than 10% higher in six regions led by London, the South East and Yorkshire and Humber.
Increasing demand and sales bring more sellers into the market
Improving market confidence is bringing more sellers into the market. We have seen an increase in the number of new homes being listed for sale.
The flow of new homes for sale is 10% higher than a year ago and the highest it’s been since 2020. New sellers are listing their homes at the fastest pace in the East of England, the South West and North East.
33 days to agree the sale of a home
In 2023 the average sale took 34 days - from the property first being launched to the market to a sale being agreed, subject to contract.
This is 2 weeks longer than the hotter pandemic fuelled market of 2022 - when homes went under offer in 20 days.
Pitching the asking price at the right level is key to attracting demand and getting a sale agreed. This can be harder for unique or unusual homes. Sellers need to speak to local agents to understand the market and the demand for their type of home.
The longest sales periods in 2023 were up to 40 days in London and the South East with the fastest sales periods in Scotland (20 days) and the North East (30 days).
This difference primarily reflects housing affordability and the impact of higher mortgage rates on buying power in markets with high house prices. It’s why falling mortgage rates are boosting activity more in southern England, especially London.
It’s important to note that once a sales has been agreed, it can take another 3-6 months for the legal and mortgage process to get to an exchange of contracts - and then legal completion, when you can get the keys to your new home.
A need for realism on pricing remains
We expect rising activity to continue over the coming months. The market is better balanced between sellers and buyers than it has been for 3 years.
Despite reports that house prices are rising once again, it’s important sellers keep their feet on the ground.
The positive news is that finding a buyer is going to be easier for most sellers but more choice of homes for sale will mean greater room for negotiation.
Key takeaways
- Buyers and sellers are returning to the housing market in growing numbers, boosting sales across the UK
- London is leading the way in terms of buyer demand, followed by the North East and North West regions
- Meanwhile, the flow of new homes for sale is 10% higher than a year ago and the highest it’s been since 2020
Average rent in London: February 2024
The average rent in London is now £2,119 per month after +6.4% growth in the last year. The cheapest average rent is in Bexley (£1,520) and the highest average rent is in Kensington and Chelsea (£3,460) although rental increases are slowing in the most expensive parts of the city.
London is by far the most expensive place to rent a home in the UK with an average rent of £2,119 for new lets. Average rents in London are almost double the UK average of £1,220.
However, rental inflation in London has slowed in the last 12 months, now at +6.4% versus +16.1% a year ago. This is currently lower than UK-wide growth of +8.3% over the last year.
Average rental prices in London
| Average monthly rent in London (December 2023) | Average monthly rent in London (December 2022) | % change in the last 12 months | £ change in the last 12 months |
|---|---|---|---|
| £2,119 | £1,989 | +6.4% | £130 |
Zoopla Rental Index. Data to December 2023, published February 2024
Average rent by local authority in London
The table sets out the average rent for every local authority in London, starting with the cheapest. It also shows how much rents for new lets have increased in the last 12 months in each location.
| London borough | Average monthly rent (December 2023) | % change in the last 12 months | £ change in the last 12 months |
|---|---|---|---|
| Bexley | £1,520 | +11.7% | +£160 |
| Croydon | £1,540 | +9.2% | +£130 |
| Sutton | £1,544 | +11.9% | +£160 |
| Havering | £1,583 | +13.6% | +£190 |
| Bromley | £1,609 | +9.6% | +£140 |
| Enfield | £1,649 | +11.3% | +£170 |
| Hillingdon | £1,656 | +11.9% | +£180 |
| Barking and Dagenham | £1,657 | +13.3% | +£190 |
| Redbridge | £1,720 | +13.0% | +£200 |
| Lewisham | £1,740 | +8.4% | +£130 |
| Harrow | £1,774 | +10.3% | +£170 |
| Waltham Forest | £1,782 | +11.4% | +£180 |
| Kingston upon Thames | £1,801 | +10.1% | +£160 |
| Hounslow | £1,844 | +9.2% | +£160 |
| Greenwich | £1,865 | +9.1% | +£160 |
| Barnet | £1,890 | +9.3% | +£160 |
| Haringey | £1,917 | +9.9% | +£170 |
| Brent | £1,949 | +7.4% | +£130 |
| Ealing | £1,956 | +9.0% | +£160 |
| Merton | £1,976 | +7.7% | +£140 |
| Newham | £1,983 | +7.2% | +£130 |
| Richmond upon Thames | £2,095 | +7.2% | +£140 |
| Lambeth | £2,181 | +5.2% | +£110 |
| Southwark | £2,217 | +5.7% | +£120 |
| Hackney | £2,330 | +6.1% | +£130 |
| Tower Hamlets | £2,331 | +5.% | +£110 |
| Islington | £2,380 | +6.4% | +£140 |
| Wandsworth | £2,383 | +6.7% | +£150 |
| Hammersmith and Fulham | £2,616 | +7.3% | +£180 |
| City of London | £2,629 | +3.4% | +£90 |
| Camden | £2,669 | +6.2% | +£160 |
| City of Westminster | £3,153 | +4.8% | +£140 |
| Kensington and Chelsea | £3,460 | +5.1% | +£170 |
Zoopla Rental Index. Data to December 2023, published 2024
Rental growth has slowed the most in Inner London boroughs, which are also commonly the most expensive with average rents sitting well above £2,000 per month. For example, we were seeing rent rises of up to +20.9% in Tower Hamlets a year ago where the average rent is £2,331, but these increases have now steadied to +5.0%.
However, the experience of renters in Outer London is a different story, with double-digit rental inflation in many areas. Rents have risen by more than +13% in the last year in more affordable eastern boroughs of Havering, Redbridge and Barking and Dagenham.
These reductions suggest landlords are becoming more realistic in pricing their rentals and may be taking cost-of-living struggles into consideration when setting new rates, which tend to be exacerbated for those in the rental market.
What’s next for the London rental market in 2024?
We expect the growth of London rents to slow to around +2% on average in 2024.
It’ll be a reprieve for London renters as they already face the highest rents and lowest affordability of anywhere in the country. The average renting household in London (1.25 people) already spends 40.4% of their earnings on rent compared to a UK average of 28.4%.
Demand from London renters will continue to drop as many cannot afford further rent rises amidst other affordability pressures.
London renters will continue to look for lower rental prices in the outer boroughs and nearby commuter towns, which will keep average rents rising in these places.
Key takeaways
- London’s average rent is currently £2,119 after +6.4% growth in the last year
- This annual increase is lower than the UK as a whole as London rents have started to reach an affordability ceiling
- The borough of Bexley has the cheapest average rent in London at £1,520 but rents are still rising quickly in these comparatively cheap spots on the outskirts
- Rents are much higher in Inner London boroughs like Kensington and Chelsea, the City of Westminster and Camden but annual increases are lower at around +5%
Average rent in the UK: February 2024
The average rent in the UK is now £1,220 per month after 8.3% growth in the last year. The highest average rent in the UK is in London (£2,119) while the North East has the lowest monthly rent (£695).
The average UK rent for new lets has now reached £1,220, an +8.3% rise in the average UK rent over the last year.
This equates to UK renters paying an extra £1,100 per year (or £90 per month) compared to a year ago.
However, this rate of inflation is lower than we’ve seen at any time during the last two years. In 2023 alone, rental growth dropped from +11.4% to +8.2%.
Average rental prices in the UK: last 3 months
| December 2023 | November 2023 | October 2023 | |
|---|---|---|---|
| Average monthly rent in the UK | £1,220 | £1,200 | £1,166 |
data to December 2023, published in February 2024
Average rent by region
Average rents vary across the country, from a high of £2,119 per month in London to £695 per month in the North East.
Rent growth has now slowed in all regions except the North East. Average rents for new lets in the region increased by +9.3% in the last year, compared to +8.1% the year before.
The table shows current average rents for new lets across UK regions and how much they have changed in the last year.
| Region | Average monthly rent | Change on a year ago (%) | Change on a year ago (£) |
|---|---|---|---|
| London | £2,119 | +6.4% | +£130 |
| South East | £1,325 | +9.3% | +£110 |
| East of England | £1,162 | +9.3% | +£100 |
| South West | £1,076 | +8.1% | +£80 |
| West Midlands | £905 | +8.7% | +£70 |
| Wales | £880 | +9.4% | +£80 |
| East Midlands | £860 | +9.2% | +£70 |
| North West | £847 | +10.2% | +£80 |
| Yorkshire and the Humber | £799 | +7.7% | +£60 |
| Scotland | £791 | +11.6% | +£80 |
| Northern Ireland | £733 | +3.7% | +£30 |
| North East | £695 | +9.3% | +£60 |
December 2023, published in February 2024
Rental inflation in Scotland boosted by rent controls
In September 2022, the Scottish Parliament introduced a rent cap of 3% on annual rises to existing tenancies.
While intended to reduce cost-of-living pressures for renters, it means landlords are now going higher at the start of a tenancy to cover their costs and the limited increases during the contract.
This leads to Scotland having the highest level of annual rental inflation in the UK at +11.1%. The average monthly rent in Scotland stands at £790, £82 more than a year ago.
However, this is already a slower rate of growth than the highs of +13.7% back in February 2023, but we still expect Scotland to see faster rental growth than anywhere else in the UK in 2024.
Fast-increasing rents in Glasgow (+11.4%) and Edinburgh (+12.5%) are encouraging renters to look into neighbouring areas, leading to large rent increases beyond main cities. Average rents in three local authorities adjacent to Glasgow and Edinburgh breached the £1,000 mark in 2023 (East Dunbartonshire, East Renfrewshire and East Lothian).
Rental inflation is much less dramatic in rural parts of Scotland, with Aberdeenshire, Moray and the Highlands all recording growth below +6%.
Rental inflation slows down in inner London
Rental inflation has slowed down in London and some southern cities in the last 12 months, giving some relief to renters in the expensive South of England.
The largest moderation is in London, where rental inflation has dropped from +16.1% a year ago to +6.4% today.
Rental growth has slowed the most in Inner London boroughs. A year ago, we were seeing rises of up to +20.9% in Tower Hamlets, which has now dropped to +5%.
However, the experience of renters in outer London will be different, as there is still double-digit rental inflation in many areas. Rents have risen by more than +13% in more affordable eastern boroughs of Havering, Redbridge and Barking and Dagenham.
These reductions suggest landlords are becoming more realistic in pricing their rentals and may be taking cost-of-living struggles into consideration when setting new rates, which tend to be exacerbated for those in the rental market.
What factors influence rental prices?
One of the most important factors that influences rental prices is the level of demand from renters versus supply of rental properties.
A chronic mismatch between supply and demand has been the defining feature of the UK rental market for three years. It’s the main reason rental inflation has been so sharp during that time.
Rental growth is also impacted by earnings growth - a strong jobs market and subsequent wage rises keeps demand high and means tenants can weather rent increases.
In the last year, higher mortgage rates have also impacted rents as they’ve prevented more would-be first-time buyers from owning a home and boosted demand for rental homes.
What are renters doing to minimise the impact of higher rents?
Some renters have escaped the steepest rises by staying in their existing homes.
Year-on-year rises for established tenancies rose at the slower rate of 6.2% according to the Index of Rental Prices from the Office for National Statistics.
When renters move and are faced with higher rents and a limited supply of homes on the market, they're more commonly considering renting smaller homes, moving to cheaper areas or house-sharing to reduce costs.
House-sharing reduces the cost of housing per person but it comes at the personal expense of privacy and space. Data from the Resolution Foundation found private renters have experienced a 16% reduction in floor space per person over the last 20 years.
What’s next for the rental market?
We believe that the rental market is now past peak rental growth after starting to cool in the final months of 2023.
We expect a further slowdown in rental growth in 2024 as worsening affordability keeps demand in check and supply improves slowly. There are already signs asking rents have overshot in some of the most expensive markets that are showing resistance to higher rents.
Slower increases will be welcome news to renters who have often faced steep hikes in the last two years.
Key takeaways
- The average UK rent has risen 8.3% on average in the last year, adding £1,100 to the average annual bill
- UK renters are now paying £1,220 per month on average, ranging from £695 in the North East to £2,119 in London
- Rental growth slowing to single digits is a sign we're past peak growth after nearly two years of 10%+ increases
- Scotland continues to register the highest rental growth for new lets despite rent controls
- London is seeing growth slow the most as rents hit an affordability ceiling
- We expect a further slowdown in rental growth in 2024 as worsening affordability keeps demand in check
4 things you might not know about homelessness
Ruth Stone is a Strategic Communications Project Manager at Crisis and her role is all about helping people understand the realities of homelessness. Here, she shares 4 things you might not know about homelessness.
What does home mean to you?
For me, it’s a place I share with my partner and our cats. It’s a space to unwind and be myself. I’ve moved home a lot – and whenever I get to a new place, I unpack my things as quickly as possible so it feels like home. I start with the kitchen because I am never happier than when I’m cooking.
Whatever home means to you, it’s about much more than a roof over your head or somewhere to sleep. And yet sometimes we can forget this when we think about the issue of homelessness.
The views that we have about any topic – including homelessness - are formed in us over a long period of time. They come from our experience, our culture and our media. What we see and hear on the news, in film, on podcasts or just in conversation with family, friends and colleagues all shapes our thinking.
When it comes to homelessness, research has shown there is often a big gap between the realities of what it is, what causes it and how to end it - and how people think and understand the issue.
My role at Crisis is focused on helping to close this gap by working with organisations and individuals to tell a different and more helpful story about homelessness. Which is why I’m sharing four things you might not know about homelessness.
1. Homelessness can be visible or hidden
Homelessness doesn’t look one way. When we think about homelessness, we tend to go straight to the most visible form - rough sleeping. Which makes sense as this is the type of homelessness we see as we travel around our towns and cities.
But homelessness can also be less visible or hidden. For example, many people might be sleeping on a different friend’s sofa every week.
Hidden homelessness also includes unconventional accommodation. This is when people sleep in spaces that are not intended as residential accommodation, like a car, lorry or shed. Some people sleep on public transport because they have nowhere else to go.
None of us should be forced to experience any of these types of homelessness. All of us should have a safe and stable home.
2. Homelessness can be short term or long term
Hostels, shelters and refuges are forms of emergency and temporary accommodation. People may be in this type of accommodation from one night to indefinitely.
The cost of living, rising rents and a sheer lack of truly affordable homes means a record number of us are currently trapped in temporary accommodation.
When we’re forced to live in temporary accommodation that is often unsuitable, insecure and far away from our support networks, it makes it so much harder to do basic things – like register for a doctor, cook a healthy meal, travel to work or do our homework.
3. All forms of homelessness are bad for our health
Whether someone is sleeping on the streets in fear of their safety, facing the constant stress of living with their family in a cramped hotel room or having to move to another sofa week after week, homelessness takes a huge toll on people’s mental health.
Home should be a space where we can thrive. Where we can relax and spend time with our loved ones. It should be a place where we can rest and recover if we are ill.
It’s not ok that the health and wellbeing of hundreds of thousands of us is being harmed by homelessness. But it doesn’t have to be this way!
4. Homelessness can be ended
The final thing I want to share about homelessness is that it can and must be ended. This isn’t me being optimistic or naïve. This is something that is entirely achievable – but it requires political commitment as well as support from people like you.
My Grandma was born in 1924 – four years before women in the UK had the same voting rights as men. As a queer person, I grew up thinking I’d never be able to marry someone that I love. We decided as a society that things could be different.
And we can do the same with homelessness.
We know what needs to be done - just like we did with voting rights, and with equal marriage. We need to build more truly affordable homes and provide more support for those of us at the brink. The more of us who come together to demand this change, the louder our voice will be heard.
Bank Rate holds at 5.25%, so when will rates drop?
The Bank Rate has remained unchanged for the fourth time in a row since it was raised from 5% to 5.25% in August 2023. Rate cuts aren’t expected until later in the year but mortgage costs have still been falling.
Why has the Bank Rate stayed the same?
The Bank of England monetary policy committee voted by a majority of 6-3 to keep the Bank Rate unchanged this month, with two members voting to increase it by 0.25% and one to cut it by 0.25%.
Although energy prices have fallen, wage growth has eased and the prices of goods and services have been rising more slowly, there’s still a risk that overall inflation will increase again.
The conflict in the Middle East and the attacks on container ships in the Red Sea are two of the factors that could see prices rising faster again.
The committee forecasts that inflation will temporarily fall to its target of 2% in the second quarter of 2024 but that it will increase again over the rest of the year.
It then thinks it will be 2.3% in two years’ time and 1.9% in three. Because of this, there are no rate cuts for now, despite little economic growth.
The Bank of England is giving nothing away about how long it thinks rates should stay the same but experts are predicting that there could be a cut in May or June.
What’s happening to mortgage rates?
While borrowers on variable rates will be disappointed that the cost of their mortgages won’t be going down this month, lenders have been cutting the rates of new mortgage deals over the last six months.
This is good news for first-time buyers but anyone remortgaging is still likely to experience a shock increase in their mortgage repayments.
Mortgage costs – whether you’re taking out a new deal or reverting to your lender’s standard variable rate – remain much higher than they were two or five years ago, when most borrowers would have taken out their current deals.
How have higher mortgage costs affected house prices?
Higher mortgage rates led to fewer property purchases and less mortgage lending in 2023, according to industry body UK Finance. Despite this drop in demand, house prices didn’t follow for the majority of UK homeowners.
According to our latest data, more than half (56%) of homeowners saw the value of their homes stay the same or increase by at least 1% in 2023.
A quarter of homes increased in value by between 1% and 5% while a 10th increased by a sizeable 5% or more.
The average value increase was £7,800. Percentage price rises were larger in more affordable areas of the country, with the biggest increases in the North West and Scotland.
This is dramatically different to 2022, though, when 96% of homes saw their value staying the same or going up and the average increase was £19,700 where it did rise.
What’s the outlook for the mortgage market?
While mortgage costs have been going down, mortgage rates will continue to be relatively high compared to two or more years ago. Rate cuts are on the horizon, though, which will be welcome news for first-time buyers and homeowners alike.
Our Executive Director of Research, Richard Donnell, says: 'The debate about the timing and scale of base rate cuts is important for the mortgage rate outlook.
'The peak in base rates last year led financial markets to bet on lower rates in 2024 and into 2025, which have shaved almost 1% off fixed rate mortgages over the last 2 months.
'There is a sense these cuts to rates are close to bottoming out for now and unlikely to move any lower.
'Inflation is down but not out and central banks want to get it under control before cutting base rates.
'It looks likely mortgage rates will remain in the 4.5% to 5% range, which is still cheap by long run standards.
'Those looking to move or refinance should chat to a broker and seek advice about the rates available and the best strategy for them.'
Key takeaways
- The Bank Rate remained at 5.25% today, despite hopes it would come down
- Inflation has fallen significantly over the past year but it's still above the Bank of England’s target of 2%. It stood at 4% in December 2023, unexpectedly rising slightly from November’s figure of 3.9%
- World events are among the factors that could push inflation up again in the second half of this year
- But experts are predicting that there could be a cut in May or June
The home value winners and losers this year
Where did homeowners gain value in the last year? Do you fall into the not-to-lucky group who lost more than 5%? Let’s find out.
Just over a year ago, all the talk was around house prices dropping by up to 10% in 2023.
But things don’t seem quite so bad in hindsight.
And a huge 77% of home values remained within the +/-5% range, highlighting the more stable nature of house prices since stricter mortgage restrictions were introduced in 2015.
Although there are some winners: 1 in 10 UK homeowners gained 5%+ in value, gaining £17,200 on average.
And some losers: just over 13% of homes dropped more than 5% in value, each losing an average of £13,200
| Lost 5% or more in value | Value remained within +/-5% | Gained 5% or more | |
|---|---|---|---|
| Percentage of UK homes | 13% | 77% | 10% |
| Number of UK homes | 3.7 million | 23.1 million | 3.1 million |
January 2024
The winners: where the most homes gained 5%+ in value
| Local authority area, region | Percentage of homes that gained 5%+ in value |
|---|---|
| Rossendale, North West | 44.2% |
| Blackburn with Darwen, North West | 34.5% |
| Telford and Wrekin, West Midlands | 32.6% |
| Merthyr Tydfil, Wales | 32.3% |
| Burnley, North West | 32.3% |
| Bolton, North West | 31.1% |
| Inverclyde, Scotland | 30.0% |
| Glasgow, Scotland | 29.7% |
| Carlisle, North West | 28.9% |
| Knowsley, North West | 27.9% |
Zoopla, January 2024
A lucky 1 in 10 homeowners have seen gains of more than 5% in 2023. That’s 3 million of you across the UK who have gained £17,200 on average.
This year’s winners are largely based in the North West, where half a million homes (17%) gained more than 5% in value. In this region, the average value increase was a tidy £13,200.
An impressive 44% of homeowners in the borough of Rossendale saw a 5% jump in value this year, where reputable schools, stunning scenery and good commuter links are pushing values up.
Elsewhere in the North West, more than 30% of homeowners gained 5% in value in Blackburn, Burnley and Bolton. These up-and-coming commuter towns are affordable and increasingly popular alternatives to Manchester.
Beautiful Inverclyde on Scotland’s west coast and the buzzing city of Glasgow also make our winners list, with 30% of homeowners gaining 5%+ this year - compared to 16% across Scotland as a whole.
The charming Telford and Wrekin area in the West Midlands and Merthyr Tydfil near the Welsh valleys are also top 10 winners this year, with 32% of homeowners gaining 5%+.
The losers: where the most homes lost 5%+ in value
| Local authority area, region | Percentage of homes that lost 5%+ in value |
|---|---|
| Dover, South East | 52.4% |
| Hastings, South East | 50.7% |
| Aberdeen, Scotland | 45.1% |
| Canterbury, South East | 43.4% |
| Thanet, South East | 40.9% |
| Rother, South East | 38.6% |
| Folkestone & Hythe, South East | 35.8% |
| Tendring, East of England | 35.3% |
| Moray, Scotland | 32.1% |
| South Holland, East Midlands | 31.5% |
Zoopla, January 2024
While home values generally fared better than expected last year, there’s no denying that some places lost out - with home values falling by 5%+ over 2023.
The South East was the worst hit, with 18% of homeowners seeing their home’s value drop by 5%+. Of these, the average loss was £13,200 over the year.
These falls are clustered around the Kent and East Sussex coasts: half of all homes in both Dover and Hastings lost 5%+ in value, along with more than 35% of homes in Canterbury, Thanet, Rother, and Folkestone and Hythe.
The East of England saw 18% of properties lose value, although by a lesser average of £11,500. The proportion of homes losing value jumps to 35% in Tendring on the Essex coast, while it was above 27% in both Colchester and Great Yarmouth.
Rural and coastal areas within commuting distance of larger cities saw a large flow of buyers during the Covid-19 pandemic. Home values in these areas are adjusting back now that demand has cooled.
Who will win and lose in 2024?
We think this year will serve up more of the same for homeowners in the UK.
We’re expecting an average fall of around 2% across the country, although - like 2023 - this will differ depending on where you live and what sort of home you own.
How do we work out home values?
We only use data from regulated sources to create our home estimates. These sources include:
-
Data from HM Land Registry and Registers of Scotland
-
Official survey records from accredited surveyors
-
Energy Performance Certificates
We combine this data with live property listings in your area to take the latest local market trends into account.
Once we’ve created estimates for around 30 million homes in the UK, we can analyse the data as a whole and bring you reports like this.
But we don't claim to know everything. We provide confidence ratings to let you know if our data sources haven't updated or we don't have enough info.
And that's why we always recommend you get an estate agent valuation for the most accurate picture of what your home is worth.
Key takeaways
- 1 in 10 UK homeowners gained 5%+ in value in 2023
- The largest proportion of homeowners (77%) saw no significant change to their home’s value in 2023, contradicting predictions of major price falls
- But there are some losers - 13% saw their home’s value fall by 5%+ in the last year
3 in 5 homes rise in value over 2023
At the beginning of 2023, commentators predicted home values would plummet by as much as 10% over the course of the year. Here’s what actually happened.
In 2023, the press was filled with gloom and doom predictions of homes plummeting in value by as much as 10%.
However, our data reveals that in reality, more than half of UK homeowners (56%) saw their home values stay the same or increase by at least 1% over the course of the year.
Senior Property Researcher, Izabella Lubowiecka, says: ‘Where values went up, the average increase seen was £7,800. And 1 in 10 (or 3 million) UK homeowners even registered gains of more than 5% (or £17,200).’
It is a different picture to what happened the year before in 2022, when 96% of homes either held their value or saw an increase. Back then, the average value hike was £19,700.
However, we can clearly see that most homeowners didn’t see the hefty value falls that some initially predicted.
Where did homes rise in value in 2023?
‘There is a clear north-south divide in the fortunes of homeowners during 2023,’ says Lubowiecka.
‘Areas with lower house prices were cushioned from the impact of higher mortgage rates, helping to support activity and sustain house prices in these regions.
‘So in the more affordable parts of the country, such as the north, home values increased.’
In fact, the North West led the way in value gains, with the highest proportion of homes registering value increases of 5% or more (£13,200 on average).
Here, terraced homes proved to be the hottest properties, with 19% of terraces rising by 5%+.
It was hotly followed by Scotland, where 16% of homes (400,000), increased in value by 5%.
Here, apartments proved to be the highest risers, with 19% registering a value increase of 5%+.
The North East and Yorkshire and the Humber take joint third place, with 1 in 7 homes going up in value by 5%+.
Flats were the winners in the North East, with 25% rising by 5%+ in value.
Meanwhile, in Yorkshire and the Humber, terraced homes came up trumps, with 16% rising by 5%+.
Which types of homes held their value in 2023?
In 2023, the nation’s favourite property types: semi-detached homes and terraces, proved to be the best at holding their value.
‘Homes seen as good value for money continued to attract buyer interest, leading to stronger price performance,’ says Lubowiecka.
‘That said, the larger value gains of 5%+ were equally spread across different property types and enjoyed by 1 in every 10 UK properties.’
Where did home values fall in 2023?
While home values did better than expected, not all homeowners saw their homes increase in value in 2023.
44% of UK homes fell in value by at least 1% over the course of the year. Within that 44%, one third of homes lost 5%+ of their value from 2022.
Homeowners in the South, where house prices are less affordable, were most likely to see the falls.
Some 3 in 5 (or 4 million) homeowners in the East and the South East of England saw a value decrease of 1% or more.
And just over a million of these saw decreases of 5% or more.
‘In the East of England, the average loss was £11,500, while in the South East, it was £13,200,’ says Lubowiecka.
‘The coastal areas of Kent and East Sussex suffered the most in terms of value losses, with half of homeowners in Dover and Hastings experiencing value falls of 5% or more.’
During the pandemic, these rural and coastal areas within commuting distance of larger cities saw a large influx of buyers, boosting house price growth.
But now demand is starting to wane, leading to larger value falls here.
Which types of homes lost the most value in 2023?
Detached houses were most likely to lose value in the East of England (23%), while in the South East, apartments bore the brunt of the losses (25%).
Across the UK as a whole, value drops were more common for detached houses and bungalows, which are less common and often priced at a premium. 48% of these property types lost value in the last year.
Flats also suffered in 2023, despite some pick-up in buyer interest. Our data shows that exactly half of UK flats lost some value last year.
Larger flats fared better than smaller flats, with 52% of 3-bed flats holding or increasing in value. But in contrast, only 46% of 1-bed flats enjoyed the same benefits.
Why we didn’t see house prices plummet in 2023
New mortgage regulations introduced in 2015 helped to prevent homes from being ‘over-valued’, which can lead to property market crashes.
When agreeing to offer mortgages, lenders had to ensure their borrowers could still repay those mortgages at higher interest rates when they took out the loans.
So, if your mortgage rate was say, 2%, you had to prove you could still afford to repay it if it rose to 5%.
That, in turn, meant borrowers wouldn’t be forced to sell their homes if mortgage rates increased, because they had already proven they could meet those higher monthly payments.
Lots of forced sales negatively affect property values, so these regulations helped to protect house prices from a major downturn.
Will home values rise or fall in 2024?
‘Zoopla predicts modest house price falls of 2% in 2024 across the UK,’ says Lubowiecka.
‘This signals a repetition of the last year in terms of pricing as well as key themes influencing the market.
‘How this is going to impact your home value depends on where you are in the country and what property type you own. But we expect those who saw home value growth in 2023 to see similar increases in 2024.’
Higher mortgage rates will continue to limit many peoples’ buying power, and this impact will be most felt in the high-value regions in the South.
‘We anticipate further value drops in the south, especially in areas where values shot up during the pandemic.
‘Flats and detached homes here are most likely to register further value falls, so if you’re planning to sell a home like this in 2024, it’s important to set your price at a realistic level right from the start,’ advises Lubowiecka.
Meanwhile, popular property types such as terraces or 3-bed houses that offer good value for money are likely to hold or increase in value.
Thinking of selling? It’s always a good idea to speak to a local agent to get a valuation for your home.
Estate agents will be on top of all of the local market trends in your area, while taking into account your property’s unique characteristics and all of the improvements you’ve made to it to set the best possible price for a sale.
How we calculate our home values
Monthly estimates for every home in the UK, to show homeowners how much their home is worth.
Our data source, Hometrack's market-leading Automated Valuation Model, is reliably used by mortgage lenders across the UK to assess a home’s value.
And while not as conclusive as an agent valuation, which takes in all of the recent work you might have done to your property, our estimates provide a good initial indication of your home’s worth to help you unlock your next move.
How current estimates differ from sold house price data
Every month, we and many other organisations publish a house price index.
House price indices are a useful guide to the overall direction of travel in national house prices.
But homeowners really want to understand how the value of their own home is moving over time, which could be different to what’s reported in a national index.
In 2023, most house price indices registered modest annual price falls as higher mortgage rates hit buying power.
Many places experienced price falls for the first time since the Global Financial Crisis in 2007.
But while the overall average UK house price moved lower over 2023, the nation’s 30 million homes are spread across thousands of housing markets.
And our data reveals not every home fell in value last year: 3 in every 5 homeowners can testify to that.
Key takeaways
- 3 in 5 homeowners saw their homes hold their value or rise by an average of £7,800 in 2023
- 1 in 10 saw their home’s value increase by 5% or more
- Greater gains were seen in affordable areas like the North West, whereas homes in the South were more likely to see values drop
Two-thirds of first-time buyers team up to step on the property ladder
First-time buyers accounted for more than half of all home loans in 2023 - and more than two-thirds teamed up to secure their own homes.
Almost two thirds of first-time buyers teamed up last year in a bid to get onto the housing ladder.
Against a challenging economic backdrop, 63% of first-time buyer mortgage completions in 2023 were in joint names, with two or more people. Just 37% were sole applications, according to the latest research from Halifax.
First-time buyers accounted for just over half (53%) of all home loans last year, the highest proportion since 1995.
But the overall number of buyers that stepped onto the housing ladder last year stood at 293,339 – a 21% drop compared with 2022.
The number of first-time buyers fell in all regions across the UK in 2023, with the greatest drops in East Anglia and the south east.
What was the average deposit paid by first-time buyers in 2023?
Halifax said it was ‘unsurprising’ that the bulk of first-time buyer mortgage applications were joint, given the increase in deposits over the last decade.
First-time buyers forked out an average deposit of £53,414 last year, around 19% of the purchase price. That’s £9,057 (15%) less than in 2022 but £21,000 (67%) more than 10 years ago.
And even though the typical salary is higher than 10 years ago, first-time buyers have to save more than a year’s average pay for a deposit large enough to buy a first home, according to the lender.
Terraced homes most popular among first-time buyers
In a glimmer of hope for aspiring homeowners, the average price tag of a home for a first-time buyer fell 5% from its peak in 2022 to £288,136.
But house prices for first-time buyers remain over £132,000 (86%) more expensive than a decade ago.
Halifax’s research also revealed that terraced homes were the most sought-after type of property for first-time buyers in 2023, making up 30% of all first-time buyer mortgages.
But their popularity has faded over the last decade, with the number of first-time buyers snapping up a terraced home dropping by 7% compared with 2013.
Flats, on the other hand, have risen in popularity. The number of first-time buyers purchasing a flat over the last 10 years has climbed by 6%, increasing in every region and nation in the UK.
Where are the most affordable places to step onto the housing ladder?
First-time buyers should look to Scotland to boost their chances of homeownership. Many of the most affordable places to buy a first home are in Scotland, said the lender.
Inverclyde was crowned the most affordable area last year, where properties were around 2.6 times the average salary (£41,598).
At the other end of the spectrum, London was home to some of the least affordable places to get onto the housing ladder. Properties in Islington, north London, were a whopping 10.6 times the average salary (£57,548).
To put these figures into wider context, average property values for first-time buyers are around 6.7 times the average UK salary (£43,257), according to Halifax.
Kim Kinnaird, director, Halifax Mortgages said: ‘Following a record year in 2021, unsurprisingly in view of the wider economic environment, the number of first-time buyers joining the property market fell again in 2023 to around 293,000.
‘Despite this drop, new buyers made up over half of all home loans. However, to get a foot on the ladder most people are now buying for the first time in joint names.
‘The overall fall in house prices we saw in 2023 will go some way to helping people get on the ladder for the first time – but these buyers are still dependent on a steady supply of properties in their price range, while they are faced with the continued pressure of saving for a deposit, when rent and living costs are high.'
Key takeaways
- Almost two thirds of first-time buyers teamed up to buy a home last year, with 63% of mortgage completions in joint names, says Halifax
- The average deposit paid was £53,414, around 19% of the purchase price
- Inverclyde in Scotland has been crowned the most affordable place in the UK to step onto the housing ladder, while Islington in London is the least
‘First-time buyers have been hit especially hard by rising mortgage rates. The sub-4% deals we increasingly hear about are typically for those with equity levels of 40% or more,’ explained Tom Bill, head of UK residential research at Knight Frank.
‘The government is likely to offer first-time buyers more financial support ahead of the election this year given that housing is a key political battleground and based on the belief that homeowners are more likely to vote Conservative.’