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House Prices Rose in 2023, Defying Expectations

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    UK Houses Prices Rise in December and in 2023

    The latest Halifax House Price Index paints a surprising picture of the 2023 UK housing market landscape.

    Spurred on by a shortage of properties in the market and mortgage rates falling, house prices rose for the third month in a row.

    While 2023 was a challenging year for homebuyers, this is another sign that confidence is improving in the housing markets – good news if you’re a buy-to-let investor.

    Let’s look at the figures in more detail.

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      How Much Did Property Prices Increase in 2023?

      According to the Halifax House Price Index, the average house price rose by 1.1% in December, a £3,000 rise from November. Averaging £287,105, this was the highest figure since March 2023, following 0.6% and 1.2% price increases from the previous two months.

      House prices also saw a quarterly increase of 1.2%.

      However, the most exciting price difference was the year-on-year change. Compared to property price figures in December 2022, house values rose by 1.7%. This was the first year-on-year growth in eight months.

      Kim Kinnaird, director of Halifax Mortgages, said:

      “The housing market beat expectations in 2023 and grew by 1.7% annually. 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.”

      Despite the upturn in fortunes, Halifax forecasts a 2-4% price drop in 2024 as many homebuyers reckon with the higher mortgage costs than they would have faced in 2021. This may mean buy-to-let investors could find a good value rental property for sale.

      Kinnaird continued:

      “As we move through 2024, the UK property market will continue to reflect the wider economic uncertainty, and buyers and sellers are likely to be naturally cautious when considering making a move. While wage growth is now above inflation, helping to ease the cost of living pressures for some and improving housing affordability, interest rates are likely to remain elevated for as long as inflation remains markedly above the Bank of England’s target.”

      Read More: Looking for more investment property advice? Check out our guide on London property investments.

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        Could We Actually Be Looking at a Positive 2024 for the UK Housing Market?

        Many forecasters predicted a considerable decline in property prices in 2023. However, the most recent Halifax House Price Index proves that the housing market troubles were overemphasised throughout the year.

        As we have covered, many still expect the market to decline in 2024. Yet, with higher wages and more affordable mortgage rates, coupled with tempered inflation and the expectation that interest rates will fall, some forecasters expect house prices to rise in 2024.

        Anthony Codling, an analyst for RBC Capital Markets, echoes this sentiment. He said:

        “With rising wages, falling inflation, falling mortgage rates, and increasing talk of election-related housing stimulus packages, we expect house prices to rise in 2024. Our pessimism was misplaced in 2023, and we don’t want to make the same mistake twice.”

        Further Reading: Gain some valuable tips for earning an income in the property market with our guides on how to make money on property and how to buy a house to rent out.

        If you still want more property investment insights, dive into some of our buy-to-let city guides. These include:

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        Dale Barham

        Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.