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London’s average property price grew by almost 3 per cent, while the average UK home fell 1.5 per cent between November and December 2022.

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The average property actually rose two per cent when compared with the same month in 2021, according to the latest Halifax house price data, while annual rate of house price growth is still slowing, as prices rose by 4.6 per cent in the year ending November 2022.

This means the average house was valued at £281,272 in December, compared to £285,425 in November.

In the 40 years since it was launched in 1983 the Halifax House Price Index has tracked a 974 per cent rise in the price of the average home.

London house prices

The cost of an average home in London in December was £541,239, a growth of 2.9 per cent annually, compared to 5 per cent last month.

Kim Kinnaird, director of Halifax Mortgages, said the fall in December was lower than the monthly decline of 2.4 per cent recorded in November, even taking into account seasonal slowdown driven by the festive period.”

“As we’ve seen over the past few months, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, is leading to an overall slowing of the market.

“The housing market was a mixed picture in 2022. We saw rapid house price growth during the first six months, followed by a plateau in the summer before prices began to fall from September, as the impact of cost of living pressures, coupled with a rising rates environment, began to take effect on household finances and demand.

“These trends need to be viewed in the context of historic prices.

“The cost of the average home remains high – greater than it was at the start of 2022 and over 11 per cent more than house prices at the beginning of 2021. The first half of last year was a very strong period for sellers, between January 2022 and August 2022, the average cost of a home rose by over £17,000 to £293,992, setting a new record high.

“As we enter 2023, the housing market will continue to be impacted by the wider economic environment and, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall, with house prices forecast to fall around 8 per cent over the course of the year. It’s important to recognise that a drop of 8 per cent would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said mortgage rates were expected to ease off, which would soften any house price falls.

He said: “Mortgage rates continue to float gently downwards with a number of lenders, including Nationwide and TSB, making further reductions to fixed-rate mortgages this week. While another rate rise is expected next month, medium and long-term rates continue to fall, allowing lenders to be more aggressive in their pricing. “

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said sales were taking longer as buyers reclaimed the balance of power due to the cost of living and interest rate rises.

Avinav Nigam, cofounder of real estate investment platform, IMMO, said the slight fall in house-price growth was expected, as momentum has slowed, reflecting economic confidence and rising interest rates from 2022.

“Buying property is more expensive due to higher rates. The stress tests applied by banks are also more stringent. The result is that many who had hoped to purchase using mortgage finance will no longer be able to, with a disproportionate impact on younger and poorer households.”

Gareth Lewis, commercial director of property lender MT Finance, claimed that the Halifax data was another indication that consumers were unsettled.

“However, with the inflationary pressures now being felt, buyers are less prepared or less able to stretch themselves even if they wanted to, which will inevitably put downwards pressure on house prices in the new year.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

North East house price slowdown

All nations and regions saw annual house price inflation, although the rate of growth has slowed.

On an annual basis, the North East saw the greatest slowdown in growth, where annual house prices rose by 6.5 per cent , compared to 10.5 per cent the prior month. Average house prices in the region are now £169,980.

Eastern England, West Midlands and Wales experienced the smallest falls in growth rate. Those buying in the East of England will now pay an average £337,215, a growth of 5.5 per cent compared to 7.2 per cent in November, while in the West Midlands average properties now cost £250,965, a rise of 3 per cent compared to 9.1 per cent in November.

The average home in Wales is now £217,547, with annual growth at 6.1 per cent, down from 7.7 per cent in November.

Those buying in Scotland will find an average home now costs £200,166, with the second greatest slowdown in the annual growth in the UK, now up 3.5%, compared to 6.4 per cent last month.

Properties in Northern Ireland are up 7.1 per cent year-on-year, lower than the 9.1 per cent last month, with average homes now costing £183,825.

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House prices are up nearly 1,000 per cent

The Halifax house price index was established in January 1983, when the average UK house price was £26,188 and the Bank of England’s base rate was 11 per cent.

Since then, average house prices have grown 974 per cent to £281,272 and the base rate is 3.5 per cent.

While the cost of buying a home was at its lowest when the Index began, looking over the past four decades, prices peaked in August 2022 at £293,992.

Regionally, London was the most expensive place to buy a home in early 1983, as it is today.

Properties in the capital were an average £36,056 in the first three months of that year, compared to £541,239 today.

Yorkshire and the Humber was then the cheapest place to buy a property, £20,332 versus £205,466 now and properties with the lowest average cost can now be found in the North East, £169,980 versus £21,494 at the beginning of 1983.

In Scotland, the average property in the first quarter of 1983 was £26,411 compared to £200,166 today.

In Wales, the average home now costs £217,547, compared to £21,388 forty years ago.

For Northern Ireland, those buying in the first three months of 1983 needed £23,383 on average, today it is £183,825.

By Samantha Downes

Source: City A.M.

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