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Are UK house prices falling in January 2024?

UK house prices have fallen -0.8% in the last year, bringing the average house price to £264,400. Here are the regions, cities and local authority areas where house prices are falling the most in January 2024.

Words by: Ellie Isaac

Senior Editor

Our House Price Index, which measures the rise and fall of house prices across the UK, has tracked a -0.8% fall in house prices since a year ago.

The average UK house price is now £264,400. That’s -£2,100 lower than a year ago and no change on last month.

However, the rate of house price falls has slowed across the UK as the number of sales agreed has picked up in the first few weeks of 2024. 

Buyers and sellers are becoming more aligned on pricing, reducing the downward pressure on sale prices. This is shown in an annual fall of -0.8% to December 2023 versus -1.1%, -1.4% and -1.2% in the previous three months.

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Where are UK house prices falling in January 2024?

A map of the UK showing house prices and annual house price inflation for UK regions and major cities.

Regions

Homeowners in Southern England are seeing the biggest fall in house prices. The East of England (-2.5%), the South West (-(2.2%) and the South East (-1.9%) are the worst hit, as higher mortgage rates reduce demand the most in more expensive regions. However, these falls are all the same or smaller than last month.

On the other hand, property prices are now +3.1% and +1.8% higher than a year ago in Northern Ireland and Scotland respectively. These gains are higher than last month’s +2.1% and +1.3% in these cities. 

In areas with lower average house prices like these regions, people can still afford to buy a home with a higher mortgage interest rate. This keeps the market moving and supports house prices to rise, albeit slowly.

Cities

Cities in the South of England are seeing the biggest house price falls, along with Aberdeen (-2.9%) where the housing market is closely linked to the local economy and oil industry. 

South coast cities Southampton (-2.7%) and Portsmouth (-2.4%) have seen the largest house price falls in England in the year to January 2024.

They’re followed by Cambridge (-2.6%) in the East, Bournemouth (-1.9%) on the south coast, Leicester (-2.0%) in the East Midlands and Bristol (-1.9%) in the South West.

These Southern cities enjoyed strong buyer demand and significant price growth during the pandemic. downward pressure on local property prices is coming now that demand is lower and supply is higher.

On the other hand, house prices are still rising slowly in more affordable cities in Scotland, Northern Ireland and the North of England. This includes Belfast (+3.2%), Glasgow (+1.3%), Edinburgh (+0.9%), Liverpool (+0.9%) and Leeds (+0.6%).

Local authority areas

Parts of Kent, Essex and Norfolk are seeing the biggest house price falls in the country. 

These popular areas saw prices rise sharply during the pandemic due to strong demand in the ‘race for space’ or lifestyle influences.

But now they’re seeing demand fall again as supply grows due to higher mortgage rates, which is putting downward pressure on house prices.

Local authority area, countyAnnual house price change (%)Annual house price change (£)Average house price
Canterbury, Kent-4.1%-£14,520£342,700
Dover, Kent-4.1%-£12,610£296,900
Thanet, Kent-4.0%-£12,180£292,300
Colchester, Essex-3.8%-£11,890£303,100
Braintree, Essex-3.7%-£13,130£341,200
Tendring, Essex-3.7%-£10,000£262,600
Great Yarmouth, Norfolk-3.7%-£7,360£193,000
Norwich, Norfolk-3.7%-£8,650£225,700
Waveney, Suffolk-3.6%-£9,070£241,700
Breckland, Norfolk-3.5%-£9,910£273,200
Zoopla House Price Index, January 2024
Local authority area and countyAnnual house price change (%)Annual house price change (£)Average house price
Dover, Kent-4.5%-£13,960£297,900
Canterbury, Kent-4.5%-£15,790£343,800
Thanet, Kent-4.3%-£13,180£293,300
Broadland, Norfolk-4.1%-£13,460£318,000
North Norfolk, Norfolk-4.1%-£13,230£313,100
South Norfolk, Norfolk-4.1%-£13,640£322,600
Breckland, Norfolk-4.0%-£11,510£273,300
Great Yarmouth, Norfolk-4.0%-£8,060£193,200
Norwich, Norfolk-4.0%-£9,480£226,200
Waveney, Suffolk-4.0%-£10,120£241,900
Zoopla House Price Index, December 2023

Why are UK house prices falling?

Higher interest rates on mortgages have made it harder for people to buy a home, which reduces demand for property. At the same time, there are many more homes on the market than in recent years.

These factors together create a buyers’ market - when buyers have more choice so sellers are under pressure to price more competitively in order to sell.

Buyer demand is sitting 12% higher than a year ago, although it’s still 13% below the 5-year average.

All our housing market measures are improved compared to last year, when the UK first felt the impact of higher mortgage rates. There are 13% more agreed sales, 14% more homes coming onto the market and 22% more total homes for sale.

However, it’s important not to over-state these improvements. We’re still in a buyers’ market and people remain very price-sensitive and focused on value due to high mortgage rates.

Will house prices keep falling in 2024?

Yes, our data suggests that house prices will keep falling slowly in 2024.

After three years of strong price growth up until 2022, higher mortgage rates are resetting the price people can afford to buy at.

Despite a modest decline in house prices over 2023, UK housing still looks 10-15% overvalued at the end of the year. We expect this position to improve during 2024 as incomes rise and house prices drift 2% lower. Sales volumes are expected to hold steady at 1 million sales completions over 2024.

Lenders are stress-testing new borrowers at over 8%, despite actual mortgage rates starting to fall. This regulatory constraint on buying power is one reason we believe house prices are unlikely to rise in 2024 even if the Bank Rate starts to fall later in the year.

Mortgage rates need to drop further to improve affordability and encourage people to move.

How far house prices will fall hinges on the trajectory for mortgage rates and how mortgage lenders assess affordability. 

Some economists forecast that the Bank of England will start cutting rates around summer 2024. This would see mortgage rates falling and mean an uplift in housing market activity towards the end of 2024.

Why didn’t house prices fall further in 2023?

History suggests that mortgage rates rising from 2% to 5%+ would have led to larger house price falls than those we recorded in 2023.

But there are several reasons to explain the more modest falls.

The strength of the labour market and high growth in average earnings are important factors. Lenders’ forbearance policies are supporting households struggling with repayments, which has limited the number of forced sellers.

Perhaps most important is the tougher mortgage affordability testing for new borrowers since 2015. The new regulations were designed to stop households taking on excessive debt and artificially inflating house prices.

This has prevented a major housing overvaluation and made sure that most households can manage the transition to higher mortgage rates, although we are yet to see half of homeowners do that.

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Our House Price Index for January 2023 uses sold prices, mortgage valuations and data for agreed sales up to November 2023. It uses more data than any other to accurately track house prices and housing market trends in the UK.


We try to make sure that the information here is accurate at the time of publishing. But the property market moves fast and some information may now be out of date. Zoopla Property Group accepts no responsibility or liability for any decisions you make based on the information provided.