Are UK house prices increasing?

Some positive reports on rising house values – but no significant optimism about the housing market

In the equity release sector, we naturally carefully monitor what’s happening to the housing market. So, what’s the latest news on UK house values? 

The amount of money you can release through equity release is based on a percentage of your home’s value. Recent falls in average house prices have therefore reduced how much tax-free cash consumers can release with an equity release plan.

But are there the first tentative signs that the housing market could be set for a recovery? 

The Guardian’s Phillip Inman wrote on 14 February that: “A slowdown in the housing sector in 2023 triggered by rising mortgage costs may be over, and a downward trend in house prices has bottomed out.”

He was basing this on figures from the Office of National Statistics (ONS) showing that the decrease in average home values for the 12 months to December 2023 was 1.4%. This compared to a 2.3% annual fall recorded in November.

He went on to talk about the way lower mortgage interest rates than a year ago could release pent-up demand in the market, fuelling an increase in property prices this year.

House price data from mortgage lenders

But is it just the case that house prices have bottomed out? Or are there any signs that prices may actually be on the way up again?

Some data does suggest that prices are at last starting to increase. For example, Halifax reported that the average house price in January was £292,029 – a 1.3% increase from December 2023.

Kim Kinnaird of Halifax Mortgages, said: “This is the fourth consecutive month that house prices have risen and, as a result, the pace of annual growth is now +2.5%, the highest rate since January last year.”

As tends to be the case, data about house prices differs from lender-to-lender. This can be seen in a report from Nationwide that the average price was £257,656 in January – a rise from December’s £257,443. When seasonally adjusted, they say this represents a 0.7% month-on-month UK house price rise in January.  

While this is a small and perhaps almost negligible increase, after a lengthy period of rising interest rates and falling house prices, data like this could bring some confidence back to the housing market.

Will house values rise significantly in 2024?

As always, nobody can predict with certainty what will happen to the housing market and property values. We are seeing conflicting views of what lies ahead for the market this year.

On the one hand, in December BBC Business News reported that the government’s official forecaster said property prices were most likely to drop by nearly 5% in 2024.

But in contrast, by February Robert Gardner, Nationwide’s Chief Economist, was offering perhaps a little optimism, albeit with no prediction of a huge market recovery: “While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive.”

The bottom line is that uncertainty is the new normal when it comes to property prices. It’s why here at Equity Release Wise we’ll continue to keep a very close eye on trends in the housing market.

Equity release helps first time buyers onto the property ladder

It’s interesting to note that Nationwide’s Robert Gardner mentioned the continuing difficulty of first-time buyers struggling to raise the necessary deposit: “The proportion of first-time buyers drawing on help from friends and family or an inheritance to help raise a deposit has increased from already elevated levels.”

Equity release is potentially one way that parents or grandparents can help their children or grandchildren to get on the property ladder. We talk about this, and other reasons people turn to equity release in our article ‘What can you use equity release money for?’.

If you would like to explore whether equity release could be a suitable way to meet your financial goals, including gifting to loved ones, please call us on 0800 096 2215, or request a call back for a time that suits you. We can arrange for you to get more information and help from our selected equity release advisers.

About Richard Groom. A writer with 20+ years’ experience across several sectors including financial services, Richard has a passion for writing clear and simple content on even the most complex of subjects. In his spare time, Richard loves exploring the hills and mountains of the UK on long walks with his faithful cocker spaniel. Follow Richard on LinkedIn