UK Housing Market Shows Signs of Recovery as Rate of Price Declines Slows

According to official figures from the Office for National Statistics (ONS), the UK housing market is poised for a recovery in 2024, as average house prices experienced a modest decrease of 1.4% in the 12 months leading up to December. This marks an improvement compared to the 2.3% annual fall recorded in November, suggesting that the housing sector's slowdown triggered by rising mortgage costs may be abating, with signs indicating a stabilization in house prices.

Despite a £4,000 annual drop to £285,000 in December, which followed significant gains exceeding 20% since 2020, economists anticipate a resurgence in prices towards their previous peak this year. This projection is fueled by pent-up demand from cash buyers and first-time buyers benefiting from more affordable mortgages, as well as anticipated interest rate cuts by the Bank of England from 5.25% to 4.5%, prompting lenders to offer lower fixed-rate mortgage deals.

Regional variations in house price movements were observed, with England experiencing the highest average prices and the largest decline of 2.1% last year, while Scotland saw prices rise by 3.3% to £190,000. Notably, the north-west of England registered the highest annual percentage change in 2023 at 1.2%, whereas London recorded the lowest at -4.8%, reflecting diverse market dynamics across different regions.