Where UK house prices officially fell the most in 2023 – and areas that bucked the trend

House prices officially fell last year, according to the latest figures from the Office of National Statistics.

The ONS revealed the average UK house price slipped 1.4 per cent in the year to December, as the mortgage crunch took its toll on property sales.

It means the typical home lost £4,000 in 2023, with the average sold price coming in at £285,000.

But some locations suffered much bigger declines, with six English local authority areas seeing house price falls of 10 per cent or more.

Meanwhile, others bucked the trend with nine seeing property prices climb by 5 per cent of more.

It’s officially down: The ONS revealed the average UK house price fell by 1.4 per cent in the year to December

The ONS figures are widely viewed as the most comprehensive and accurate house price index. This is because this report by the UK’s official statisticians uses Land Registry data and is based on average sold prices. However, this also means its data lags behind other indexes.

A geographical split emerged last year in the UK when it came to property prices. 

England and Wales saw typical sold prices fall by 2.1 per cent and 2.5 per cent respectively in the 12 months to December.

However, in Scotland and Northern Ireland average prices actually rose by 3.3 per cent and 1.4 per cent.

Across the country’s regions, house price changes ranged from a 4.8 per cent decline in London and a 4.6 per cent fall in the South East, to a rise of 1.2 per cent in the North West and a slight 0.3 per cent gain in the West Midlands.

 But there were much greater differences between local authorities.

This stresses the all important point – the property market doesn’t move as one, but comprises thousands of localised markets, all behaving differently.

For example, average prices in West Lancashire rose by a staggering 9.8 per cent last year, with the typical home rising from £230,000 to £253,000.

In the City of London, average house prices fell by 17.8 per cent from £975,289 to £802,000.

Where house prices fell most in 2023 

Some of the worst performing housing markets are to be found in London. Prices in the capital fell on average 4.8 per cent in the 12 months to December.

Average house prices in The City of London (the capital’s historic financial district) are down a whopping 17.8 per cent, according to the ONS, while the City of Westminster is down 16.1 per cent. Prices in Kensington and Chelsea are also down 13.7 per cent.

The ONS cautions against reading too much into figures for very small transaction areas, such as the City of London, as they can be skewed by a few sales.

Outside of the capital, Gosport on the south cost saw an 11.5 per cent decline in house prices. Some popular commuter hotspots also suffered, with house prices falling 11.3 per cent in Tunbridge Wells, 9.5 per cent in Welwyn and Hatfield, 9.2 per cent in Runnymede and 9.1 per cent in Surrey Heath.

Where house prices rose most in 2023 

North West locations were strong performers last year, with the leading local authority area West Lancashire posting a 9.8 per cent rise in house prices.

Prices in the borough of Rossendale in the North West of England also rose by 7.9 per cent last year, according to the ONS.

Interestingly, earlier this week, Rossendale was also rated as the hottest property market of 2023 by Zoopla.

The property website revealed that some 44.2 per cent of homes there rose in value by 5 per cent or more last year – which is more than any other local authority.

At the other end of the country, Winchester and the Mole Valley, in the South, saw house price gains of 7.9 per cent and 7.5 per cent.

Will house prices rise or fall in 2024?

The ONS says average house prices actually increased by 0.1 per cent between November and December last year. 

This looks rather positive given that average prices fell 0.8 per cent during the same period 12 months ago.

Last week we heard from two separate reports that the housing market may be heating up with increasing numbers of people looking to buy or sell.

The latest property market survey by the Royal Institution of Chartered Surveyors (Rics) showed that estate agents and surveyors are seeing rising numbers of buyer enquiries as well as more sellers coming to market.

Meanwhile, Rightmove revealed a record number of homeowners contacted an estate agent to get their home valued in January.

Jonathan Hopper, CEO of Garrington Property Finders says: ‘The reset is quickly moving towards a recovery.

‘Crucially we’re starting to see more stock come onto the market as people who delayed their moving plans last year decide that now is the time to act before prices pick up speed again.

‘The recovery remains tentative, but there is a growing sense that 2023’s price reset is over, and that last year’s widespread price falls in England and Wales have made many areas better value.’

The renewed confidence from buyers has come alongside mortgage rates falling from their peak late last summer, with big cuts arriving in the new year.

Nicky Stevenson, managing director at national estate agent group Fine & Country adds: ‘House prices finished the year down compared to 2022, as the gap between what sellers would accept and buyers would pay for a home narrowed.

‘However, the small uptick in prices in December lends credibility to the suggestion that the property market is in a much healthier position overall than it was at the start of last year.’

Many within the property industry believe that mortgage rates have now reached levels that will encourage buyers and home movers back into the market. 

Although average fixed mortgage rates remain just above 5 per cent, according to Moneyfacts, the cheapest deals are now below 4 per cent.

There is also now wide expectation that mortgage rates may fall further as the year progresses. 

Jonathan Hopper says: ‘As the cost of borrowing edges down, homes are becoming more affordable. 

‘With consumer inflation stuck at double the Bank of England’s target, interest rates may come down more slowly than many had hoped, but last year’s trickle of buyers has already turned into a stream.’

Stevenson adds: ‘Expectations are that rates could fall at some point this year, which will widen affordability and encourage more demand. 

‘Today’s news that inflation held at 4 per cent will boost hopes that interest rates will be cut sooner than anticipated.

‘The Bank of England has also reported three consecutive monthly increases in mortgage approvals as momentum builds in the housing market.

‘This pent-up demand from buyers who paused or held off on their property search means there is growing activity on the market.’

Mortgage lenders have been cutting rates since August when average two year-fixed rate reached a peak of 6.85 per cent and average five-year fixed rates hit 6.37%

Another factor that may support house prices is the fact the number of new homes planned by housebuilders fell by almost half last year.

Interestingly, the average price of a sold new build rose by 9.4 per cent in 2023, according to the ONS figures.

A lack of supply of new homes will likely help support prices further, according to Anthony Codling, head of European housing and building materials for investment bank RBC Capital Markets.

He adds: ‘Today’s ONS data confirms that 2023 was not the year of the house price crash and with falling inflation, falling mortgage rates and rising wages we doubt that a crash will come in 2024, and the recent words spoken, and actions taken by housebuilders confirms our view the housing market is looking up rather than down so far this year.

‘The scene is set for a recovery, and we have our fingers crossed that any moves taken by politicians this election year will help rather than hinder the housing market recovery.’

This post first appeared on Dailymail.co.uk