The average UK house price fell by 0.8% on annual basis in the year to December 2023, the latest Zoopla House Price Index has indicated.

According to the property expert’s data, the average house price in the UK is now £264,400 as of December.

Zoopla stated that house prices are continuing to adjust to higher mortgage rates through modest price falls. However, price falls are slowing as more sales are agreed at the start of 2024.

The largest price falls were in the East of England (-2.5%) and the South West (-2.2%), while Northern Ireland proved to be an outlier in the latest figures with house prices up 3.2% over 2023.

Zoopla also revealed that there has been a “strong seasonal uplift” in buyer demand in the first three weeks of 2024. Mortgage rates below 5% have led to buyer demand sitting 12% higher than it was a year ago, although this demand still remains 13% below the five-year average.

According to the property expert’s analysis, this reflects a return of pent-up buyer demand following a “weak” second half of 2023, when many buyers delayed moving in the face of rising mortgage rates.

“It’s a positive start to the year but this is a rebound off a low base,” said executive director – research at Zoopla, Richard Donnell.

“Sub-5% mortgage rates are encouraging but buyers remain price sensitive and focused on value for money. There is upside for sales volumes but prices still need to adjust to allow for reduced buying power.”

Head of personal finance at Hargreaves Lansdown, Sarah Coles, added: “This is a real positive, but sellers shouldn’t get carried away. We also saw a flood of properties onto the market, so buyers can still afford to be choosy. It means homes have to be priced realistically and sellers should still be prepared to accept an offer. At the moment, a fifth of sellers are accepting an offer of 10% below asking price. Overall, this is helping depress prices, which are still lower than they were a year earlier.

“Looking further ahead, fixed rate mortgages are expected to get even cheaper, and variable rates should follow suit once the Bank of England starts cutting rates. However, mortgages are just part of the picture. An awful lot depends on the financial position households find themselves in too. With the UK economy teetering on the brink of recession, the property market may not be out of the woods yet, and this might not be the last of the price falls we see in 2024.”

---