House Price Rises Slow but Still Grow

House price growth is shrinking across the country, according to the latest figures for January 2023 from the Office for National Statistics.

The latest ONS data shows prices slowed from rising at 9.3 per cent a year to the end of December but dropping by a third to 6.3 per cent a year in January.

The average UK home was priced at £290,000 in January 2023 - a £17,000 increase from a year earlier.

Prices were highest in the North East, where homeowners enjoyed a 10 per cent annual rise. The lowest house price increase was 3.2 per cent in London.

The ONS report also notes that the number of homes changing hands fell in January to 96,650 - a 10.6 per cent drop from January 2022 and a 2.6 per cent reduction from December.

“On a seasonally adjusted basis, the average UK house price decreased by 0.6% in January 2023, following a decrease of 0.4% in December 2022. On a non-seasonally adjusted basis, the average UK house price decreased by 1.1% in January 2023, following a decrease of 0.5% in December 2022,” said the ONS.

House prices where you are

Despite returning the best annual house price performance, the Northeast has the lowest average home price - just £163,000 in January. 

And while London has the lowest annual inflation, the capital has the most expensive homes on average - £534,000 in January.

House price history for your neighbourhood

Use this interactive map to assess how your property investments have performed. Input the town name, and the map does the rest.

 Source: ONS and Land Registry

What the experts say

Home lender data agree the mortgage and home sales markets are slowing.

The Halifax has posted figures showing a stable market, with house prices rising at 2.1 per cent in February for the third month.

“In cash terms, house prices are down around £8,500 (-2.9 per cent) on the August 2022 peak but remain almost £9,000 above the average prices seen at the start of 2022 and are still above pre-pandemic levels, meaning most sellers will retain price gains made during the pandemic. With average house prices remaining high housing affordability will continue to feel challenging for many buyers,” said director of mortgages Kim Kinnaird.

However, the Nationwide data shows prices are down 0.5 per cent month-on-month in February and fell 1.1 per cent for the second month running.

“Annual house price growth slipped into negative territory for the first time since June 2020, with prices down 1.1 per cent in February compared with the same month last year. Moreover, February saw a further monthly price fall (-0.5 per cent) – the sixth in a row – which leaves prices 3.7 per cent below their August peak after taking account of seasonal effects,” said the building society’s chief economist Robert Gardner.

Estate agents take a similar view to both lenders.

Trade body the Royal Institution of Chartered Surveyors (RICS) says many sales are completed at five per cent below the asking price, and the general outlook is negative for the market.

House price digest FAQ

The figures for average house prices and movements in property values can be confusing if you don't know how to read the data.

Here are some of the most asked questions about house price indices.

Why are the average property prices different in each report?

The reports use different data to draw conclusions and take the data from different periods.

Nationwide and Halifax base their indices on customer data, which are much smaller samples than the national data analysed by the ONS.

Acadata's methodology includes analysis that no other index uses.

Each organisation collects data over different periods, making a direct comparison difficult.

What is the average house price?

There's no such thing as an average home. The figure is calculated from the total value of all transactions in the sample divided by the number of homes changing hands.

What are the asking and sale prices?

The asking price is the amount an owner wants to achieve from a house sale, while the sale price is the negotiated amount the buyer pays.

Which house price index is the best?

All have flaws because of the restricted data, but the one with the broadest sample comes from the ONS. Unfortunately, the ONS data is usually the last to market and out of date by two to three months on publication.