House prices in London dipped in 2023, even as prices elsewhere in the UK rose, new figures from Halifax show, but the capital’s housing market avoided the crash that many commentators had predicted.
The average London home lost a little over £12,000 in value last year to £528,798 as higher mortgage rates hit buyer demand, a fall of 2.3%. But that’s a long way from predictions of a double-digit decline, made by economists when mortgage prices were soaring to 15-year highs.
Craig Fish, director of Beckton-based broker Lodestone, said: “2023 was very challenging for those looking to finance or refinance property, which resulted in price reductions across the board, though these weren’t as deep as many expected.
“As the year drew to a close, the mood music started to change, with affordability improving due to lower rates, and as a result the value reductions gradually slowed.”
The capital bucked the nationwide trend, as the average price across the UK was up by 1.7% to £287,105. House prices rose in each of the last three months of the year, including a 1.1% increase in December.
The new figures come after a week in which lenders, including Halifax, have slashed mortgage rates, with some now offering five-year fixed-rate deals below 4%. That may drive prices up in 2024.
Kim Kinnaird, Director, Halifax Mortgages, said: “In December, the cost of an average UK home rose for the third month in a row to £287,105, up +1.1% or £3,066, compared to November, reaching the highest level since March 2023.
“The housing market beat expectations in 2023 and grew by +1.7% on an annual basis. The average property price is now £4,800 higher than it was in December 2022. Whilst it’s encouraging that we saw growth in the last three months of the year, this was preceded with property price falls for six consecutive months between April and September. The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand. That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.
"2023 was very challenging for those looking to finance or refinance property, which resulted in price reductions across the board, though these weren’t as deep as many expected. As the year drew to a close, the mood music started to change, with affordability improving due to lower rates, and as a result the value reductions gradually slowed.”
