Soaring inflation and mortgage rates affected residential markets in many countries, but the effect has been especially severe in the United Kingdom. The market grew substantially in the past decade, and the coronavirus pandemic, if anything, boosted house prices and rents even further. At its peak in November 2022, the UK house price index hit 154 index points, which was
, the baseline year. An important driver for demand and house price growth during that period was the low cost of borrowing. Government schemes, such as the stamp duty holiday, were an additional incentive for prospective buyers. In September 2021, homebuyers could lock in a two-year fixed mortgage rate of 1.2 percent. Nevertheless, as
, interest rates increased. Prospective buyers or borrowers whose deals expired in September 2023
Homebuyer sentiment declining
The ongoing political instability,
high inflation, and overall worsening economic conditions had a major impact on transaction activity and house prices. When the market started to cool in 2022, the
monthly volume of housing transactions fell notably. A December 2023 survey found that about 41 of
UK adults were pessimistic about buying a home. Respondents identified the affordability of mortgage repayments as the
number one barrier to homeownership. From about 40 percent in 2021, the share of respondents worried about mortgage repayments spiked to 68 percent - a direct consequence of the mortgage interest hikes. Other concerns with growing importance were the difficulty of raising a deposit for a mortgage and the likelihood of property price falling in the future.
Where do house prices go from here?
In December 2023, the
average house price in the UK was approximately 285,000 British pounds. London, Cambridge, and Oxford saw
house prices of over 500,000 British pounds, on average. In 10 of the 32 London boroughs,
the average home sold for over 600,000 British pounds. As the cost of borrowing increases and fewer transactions take place, house price growth slows. The forecast for the development of property prices in different regions shows that London is expected to
see the slowest price growth, with a
slight drop in 2024 and a gradual improvement in the next four years.
Prime regional house prices are also forecast to decrease in 2024. Rents, on the other hand, are
set to continue to rise.
This text provides general information. Statista assumes no
liability for the information given being complete or correct.
Due to varying update cycles, statistics can display more up-to-date
data than referenced in the text.
