House prices down 1.8% over 2023

House prices down 1.8% over 2023

8:52 AM, 29th December 2023, About 5 months ago

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The last Nationwide House Price index for 2023 shows a fall in the market of 1.8% over the last year with the average Uk house price for December at £257,443

However, outperforming the rest of the UK, Northern Ireland was up 4.5% and Scotland up 0.5% last year.

Nationwide’s Chief Economist, Robert Gardner, commented: “UK house prices ended 2023 down 1.8% compared with December 2022, leaving them almost 4.5% below the all-time high recorded in late summer 2022. Prices were flat compared with November, after taking account of seasonal effects.

Mortgaged purchases down but cash transactions increased

“Housing market activity was weak throughout 2023. The total number of transactions has been running at 10% below pre-pandemic levels over the past six months, with those involving a mortgage down even more (20%), reflecting the impact of higher borrowing costs. On the flip side, the volume of cash transactions has continued to run above pre-Covid levels.

“Even though house prices are modestly lower and incomes have been rising strongly, at least in cash terms, this hasn’t been enough to offset the impact of higher mortgage rates, which in recent months were still more than three times the record lows prevailing in 2021 in the wake of the pandemic.

Affordability still stretched

“As a result, housing affordability has remained stretched. A borrower earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 38% of take-home pay, well above the long-run average of 30%.

“At the same time, deposit requirements remain prohibitively high for many of those wanting to buy. A 20% deposit on a typical first-time buyer home equates to 105% of average annual gross income, down from the all-time high of 116% recorded in 2022, but still close to the pre-financial crisis level of 108%.

“During 2023, there were signs that more buyers were looking towards smaller, less expensive properties, with transaction volumes for flats holding up better than other property types.

“This may be because affordability for flats has held up relatively better as they experienced less of a price increase over the pandemic period.”

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