The housing market in England and Wales has seen many ups and downs over the decades due to a variety of economic and political factors, with the past few years no exception.
The average UK house price peaked in October 2022 at £296,000. At the end of 2023, this figure was marginally lower at £285,000. In 2023 as a whole, house prices fell by around 1%.
There were some notable variations within the home nations. In England and Wales, the average price dropped by 2.1% and 2.5%, respectively; however, they increased by 3.3% in Scotland and by 1.4% in Northern Ireland. There were also some interesting regional variations, with the North West of England seeing the largest annual percentage increase whilst London saw the largest regional decrease.
Housing market news and property expertise
There are a significant number of firms specialising in property and conveyancing law. Some of these companies, such as https://www.samconveyancing.co.uk/news, have useful online resources, including the latest news. If you are considering buying or selling a property, you will no doubt benefit from a one stop shop for news and information in the housing market.
Reasons for stagnation/price falls
There are a number of reasons why the seemingly constant increase in house prices has stopped/slowed. One of the key factors is the uncertain economic situation over the past five years, notably high inflation. Inflation has been running high for around three years. Between 2016 and 2020, it averaged around 1.75%; in 2021 it was 4.8% and in 2022 it hit 9.2%.
To combat inflation, the Bank of England has only one tool: interest rates. These have a significant impact on the housing market, as almost all mortgages are linked to the base rate. In less than three years, the Bank of England base rate has gone from just 0.1% to 5.25%, where it remains as of April 2024. This has meant people with mortgages have seen significant increases in their repayment amounts.
Inflation has recently shown some signs of falling, with the latest figure being 3.4% (CPI) for the 12-month period to February 2024. There is a chance that the Bank of England may look to cut interest rates in the next few months, but this is far from certain.
The rest of 2024
It is generally expected that house prices will either remain broadly the same or fall a little (an estimated 4% at most). However, one estate agent is more bullish and is predicting a 3% rise for the year. What will happen to house prices this year is partially dependent on how quickly any interest rate cuts are reflected in the mortgage rates.