Latest ONS UK House Price Index makes for ‘rosy reading’ – reaction from mortgage and property experts

Today, as well as publishing the latest UK inflation data, the Office for National Statistics (ONS) has also revealed its latest UK House Price Index. The ONS data show that average UK house prices had decreased by 1.4% in the 12 months to December 2023 (provisional estimate), up from a decrease of 2.3% (revised estimate) in the 12 months to November 2023. 

The data also showed that the average UK house price was £285,000 in December 2023, which was £4,000 lower than 12 months previous. 

Mortgage and Property experts have been sharing their reaction to this latest news which gives further insight into the state of the UK property market as follows:

Tony Hall, Head of Business Development, Saffron for Intermediaries, comments:

“The latest figures make for rosy reading this Valentine’s Day, with house prices holding firm despite wider economic pressure. On a more granular level, we’re still seeing huge variation in price changes depending on the region and type of property, with Zoopla recently noting that house prices in the North West achieved the most significant gains last year. It’s also interesting to read that 61% of semi-detached homes held or gained value in 2023, compared to just one in every two flats.

“Confidence in the market, which helps to solidify pricing, is being boosted by lenders competing fiercely on product rates – Moneyfacts recorded the biggest drop in two-year fixed rates since 2022 on Monday. However, the picture is more complex than this, with some rates being priced upward in line with swap rates over the last fortnight.

“Stronger product innovation and the growing shelf life of mortgage deals is also boosting buyer enquiries, as lenders try to find more ways to help as many borrowers as possible find solutions that work for them. The outlook for prices is promising for the year ahead, and we are optimistic that the positive trend seen in today’s figures will continue in the coming months. At Saffron, we are committed to helping as many people as possible buy or build their dream home, and to offering them reassurance, support and advice along the way.”

Jonathan Hopper, CEO of Garrington Property Finders, said:

“The reset is quickly moving towards a recovery. Across the UK, house prices edged up 0.3% in December, bouncing back from November’s 0.7% fall.

“Huge regional differences mean the national figures remain tepid, but the heat is firmly back on in Scotland. Prices north of the border jumped by 3.3% (£6,600) in 2023, triple the annual rate recorded in the 12 months to November.  

“Meanwhile the average home in England got 2.1% (£7,000) cheaper in 2023, and this sense of improving value has powered a surge in buyer activity since the start of 2024.

“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 it’s being driven by two strong factors. The first is the 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 second is that 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.”

Richard Harrison, Head of Mortgages, Atom bank comments: “The news of a 1.4 % decrease in house prices in December will come as little surprise.

A seasonal dip in asking prices is always expected in the lead-up to Christmas, and the final month of 2023 saw vendors becoming increasingly competitive, reducing their pricing in the hope of closing a sale before the New Year.
 
Likewise, higher mortgage rates and stretched affordability for some buyers may have motivated them to offer below the asking price, in a bid to offset the impact of higher borrowing costs.
 
More recent indicators point to increasing house prices as confidence in the market improves, and we should see this reflected in future ONS data. The festive period was in fact a turning point, with more than 10,000 new properties coming to the market on Boxing Day – the biggest number of new sellers in one day since 2011, according to Rightmove.
 
This increased activity was also met by heightened demand, with new buyer enquiries at their strongest in almost two years in January, the latest figures from the Royal Institution of Chartered Surveyors (RICS) show.
 
Brokers have hit the ground running this year and while we have seen no movement in the base rate, lender competition has ensured the average two-year fixed rate continues to edge closer to 5%.
 
A surprise uptick in business can catch lenders off guard, leading to a slip in service, and we have already seen a number of lenders pulling some of their best buy products to manage volume and protect service levels.
 
With all the signs pointing to increased demand continuing, swift service will be key to delivering a good customer experience in 2024. Atom bank is committed to ensuring that speed and service remain our primary focuses as we head into what could be a busy year ahead.”

Commenting on the data, Nicky Stevenson, Managing Director at national estate agent group Fine & Country said: “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. 

“Pauses in the base rate have increased consumer confidence, and 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% 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. However, pricing attractively still remains key for sellers who want to grab attention and secure viewings and offers.”

Nathan Emerson CEO of Propertymark said: “When the housing market has been through a disruptive period like it has over the last three years, it normally leads to a drop in house prices as people cannot afford homes in the same way they can during a period of economic growth.  

“This drop will ease the pressure placed on people’s affordability and help them move home or step onto the property ladder.” 

CEO of Yopa, Verona Frankish, commented: 

“Where sold prices are concerned, both the annual and monthly rate of house price growth has been in decline since last summer but we’re now seeing signs of a stabilising market with the first positive monthly rate of growth. 

What’s more, there’s growing confidence that there’s more positivity to come on the horizon. 

We’ve seen mortgage approved house prices from the likes of Nationwide and Halifax climb consistently in recent months demonstrating that buyer demand is on the up and it’s only a matter of time before this uplift in mortgage market activity starts to cultivate further positive growth with respect to sold price values.”

Director of Benham and Reeves, Marc von Grundherr, commented:

“The decline in house prices seen during the latter stages of 2023 has been marginal in the grand scheme of things and they remain there or thereabouts when compared to the record peaks seen during the pandemic market boom. 

Of course, the London market has naturally been hit the hardest given the far higher cost of homeownership and the greater borrowing requirements will also mean that it trails the rest of the nation when it comes to a rebound in positive property price growth. 

However, when it does turn, it turns quickly and it’s only a matter of time before the sleeping giant of the UK property market awakens.”

Commenting on the ONS House Price Index, Arjan Verbeek, CEO of Perenna said: “House prices continuing to fall may be a welcome sign for those hoping to buy, but affordability still remains a huge barrier. The number of first-time buyers is at a 10-year low* and there’s still no light at the end of the tunnel for aspiring homeowners.

“The UK mortgage market is flawed. House prices remain much higher than the average salary, despite today’s decrease, and even if prices continue to fall, lenders are still limiting consumers’ borrowing power.  We need structural reform to rebuild the foundations for a housing market that is truly affordable and accessible. One solution is increasing the availability of flexible long-term fixes which allows consumers to borrow up to 30%** more than high street lenders. It’s now more important than ever to open the market up to alternative products and give everyone a chance to own a home. The housing market needs a breath of fresh air.”

Ruth Beeton, co-founder of Home Sale Pack, commented: “Property values remain close to historic highs and while they may have seen a marginal annual reduction during the final months of last year, the market has weathered the wider storm of economic instability, higher interest rates and a reduction in buyer activity. 

Of course, this period of prolonged market instability has left its mark and the challenge facing many sellers isn’t the price they can achieve for their home, but the time it’s taking to reach completion. 

The best advice is to remain on the front foot with every aspect of your transaction and opt for the buyer in the strongest position to proceed to give you the very best chance of a swift sale.”

CEO of Open Property Group , Jason Harris-Cohen, commented: “A monthly uplift in house prices during December, regardless of how marginal, is a very promising sign given the usual seasonal lull. This slight increase provides the first evidence that the mortgage market resurgence in both approvals and approval based house price growth is starting to filter through to sold prices.

The further positive to take is that while sold prices had been in decline since the summer, this is very much the ‘light at the end of the tunnel’ phase of this brief house price correction.”

Co-founder and CEO of GetAgent.co.uk, Colby Short, commented: “While a retrospective look at sold prices may make for worrying viewing given the consistent annual reductions seen towards the end of last year, the nation’s sellers can rest assured that these prices were agreed many months ago and the market has already turned a corner in 2024.

Another hold on interest rates has helped to bring further stability and buyers have been returning to take advantage of lower mortgage rates.

This demand should only build with the base rate expected to be cut this year and, as it does, sold prices will start to climb further.”