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House Price Changes 2023: Examining the UK Locations with the Most Significant House Price Changes in 2023

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Researchers at Bird & Co examined recently released data to determine which locations in the UK saw the biggest house price changes throughout 2023, giving us a wider picture of the housing market over the past year.

House prices directly impact personal wealth, serve as a significant investment, and influence affordability for homebuyers. Fluctuations in house prices affect lending, mortgage terms, and consumer spending, contributing to the overall economic stability of an area.

Not only this, but house values also play a role in retirement planning, and influence the dynamics of both the housing and rental markets. As such, the team at Bird & Co felt it prudent to examine the most recently released Land Registry data which shows how the market has fluctuated from beginning to end of 2023.

This study has isolated all house prices from January-December 2023, taken from the regional house price index for every city, county and local authority in the UK. From this, Bird & Co were able highlight a top 15 and bottom 15 where house prices fell and rose the most throughout the year.

In this article, we’ll break down the list of these locations, and highlight the factors that may have contributed to this, and how this may impact homeowners or prospective ones.

15 Locations That Saw the Biggest Rise in Property Prices in 2023

Comparing the house prices in December to the house prices at the start of the year, in January 2023, researchers were able to determine which areas saw the biggest percentage increase across the year.

The 15 locations that saw the largest increase in property prices, and the percentage increase in these areas, were:

Location

Jan-23

Dec-23

% Difference

  1. Na h-Eileanan Siar

 £    152,779.00

 £    175,419.00

14.82%

  1. South Hams

 £    406,494.00

 £    449,131.00

10.49%

  1. West Lancashire

 £    229,708.00

 £    252,836.00

10.07%

  1. Rossendale

 £    199,573.00

 £    219,537.00

10.00%

  1. East Renfrewshire

 £    281,886.00

 £    309,608.00

9.83%

  1. Winchester

 £    492,414.00

 £    537,592.00

9.17%

  1. Derry City and Strabane

 £    147,552.00

 £    159,405.00

8.03%

  1. Mole Valley

 £    573,487.00

 £    614,527.00

7.16%

  1. Cumberland

 £    166,475.00

 £    178,108.00

6.99%

  1. East Lothian

 £    308,006.00

 £    329,427.00

6.95%

  1. Midlothian

 £    228,412.00

 £    243,932.00

6.79%

  1. East Dunbartonshire

 £    255,861.00

 £    271,752.00

6.21%

  1. Mid Ulster

 £    163,254.00

 £    173,276.00

6.14%

  1. Renfrewshire

 £    146,346.00

 £    154,961.00

5.89%

  1. Vale of Glamorgan

 £    306,174.00

 £    323,442.00

5.64%

 

Interestingly, the areas that show the biggest increase in house prices vary between England, Wales, and Scotland, showing a range of characterises and factors at play that has influenced the results.

The figures suggest that there has been an increase in demand for houses in these areas, representing economic stability and growth, potentially low unemployment rates, and affordable housing.

Surprisingly, areas like Winchester, which is within a 2-hour commute of London, has shown one of the highest increases in house prices, yet areas such as Tunbridge Wells has seen over a 9% decrease. Considering this area is closer to London, it demonstrates that proximity to London alone is not a factor influencing the market.

15 Locations That Saw the Biggest Drop in Property Prices in 2023

In comparison, researchers were able to determine which locations saw the biggest decrease in housing prices over 2023. These areas, along with their percentage decrease, were:

Location

Jan-23

Dec-23

% Difference

  1. City of Westminster

 £ 1,109,189.00

 £    877,733.00

-20.87%

  1. Shetland Islands

 £    212,545.00

 £    172,655.00

-18.77%

  1. Kensington and Chelsea

 £ 1,353,041.00

 £ 1,125,353.00

-16.83%

  1. City of London

 £    962,674.00

 £    802,168.00

-16.67%

  1. Hammersmith and Fulham

 £    768,116.00

 £    664,767.00

-13.45%

  1. Gosport

 £    263,501.00

 £    229,869.00

-12.76%

  1. Runnymede

 £    495,194.00

 £    437,283.00

-11.69%

  1. Torridge

 £    335,700.00

 £    302,716.00

-9.83%

  1. Thanet

 £    320,371.00

 £    290,252.00

-9.40%

  1. Welwyn Hatfield

 £    439,939.00

 £    399,510.00

-9.19%

  1. Surrey Heath

 £    465,101.00

 £    424,318.00

-8.77%

  1. Reading

 £    330,805.00

 £    301,827.00

-8.76%

  1. Forest of Dean

 £    317,695.00

 £    289,932.00

-8.74%

  1. Tunbridge Wells

 £    463,540.00

 £    423,528.00

-8.63%

  1. Hastings

 £    291,188.00

 £    266,793.00

-8.38%

 

House prices dropped hardest in the most expensive boroughs, including City of Westminster, Kensington and Chelsea, and Hammersmith and Fulham.

In City of Westminster, the price of a detached house dropped from 3.5 million to 2.5 million. All types of property saw a decrease in this area.

Interestingly, even areas considered popular because of the commute times into London also saw a decrease in house prices. This includes areas such as Reading and Southampton; in Reading, a detached house price dropped by over £60k in 12 months.

A decrease in property prices within a location can have far-reaching impacts on various stakeholders. For homeowners, declining values may result in negative equity and financial strain, limiting their ability to sell without incurring losses.

This can, in turn, contribute to reduced consumer confidence as homeowners become more cautious about spending. On the flip side, potential buyers stand to benefit from increased affordability and improved negotiation power in a market with falling prices.

Areas Where House Prices Stayed the Most Stable

Alongside the places that showed the most fluctuation in house prices, there were three locations that showed a -0.01% difference in house prices. These areas, showing arguably the most stability, were Doncaster, Tewkesbury and Walsall.

Whilst stability is ultimately better than a property price drop, it can affect the ability to refinance a mortgage. Homeowners often use equity growth to qualify for favourable refinancing terms. If home values remain stagnant, it may limit refinancing options.

In a market with stagnant prices, buyers may also feel less urgency to make an offer. They can take their time to find the right property and negotiate favourable terms without the fear of rapidly rising prices.

Factors Affecting UK House Prices in 2023

House prices in 2023 were subject to the intricate interplay of various key factors, including:

Inflation

The on-going principle of supply and demand remains a fundamental driver, dictating that when demand outstrips supply, property prices tend to rise, and vice versa.

In the UK, inflation can momentarily cause a drop in property costs by limiting the number of buyers in the market, a consequence of diminished disposable income.

Economic Growth & Interest Rates

Economic growth is also a key factor, with a thriving economy and rising incomes stimulating property demand and contributing to escalating prices. Conversely, economic recessions can erode affordability and suppress demand.

The undulating tide of interest rates is another influential factor, where higher rates elevate mortgage costs, thereby dampening property demand, while lower rates often act as a catalyst for increased homeownership. In 2023, the UK saw very little growth economically and ended the year in a recession, putting a crunch on lending options for mortgages.

Consumer Confidence

Another factor affecting the property prices throughout the year comes down to consumer confidence. This plays a pivotal role, as positive market expectations fuel homebuying activity, while apprehensions about potential price declines can hinder it.

Unemployment Rates & Cost of Living

Unemployment rates, which indicate the economic well-being of an area, not only affect how affordable homes are but also discourage people from buying homes.

The ease of getting a mortgage is crucial because stricter lending standards make homes less affordable, while more available mortgage options can boost demand. As housing costs rise compared to incomes, overall affordability decreases, influencing the demand in the property market.

Geographical Factors

Specific geographical factors can defy national trends, with high demand and limited supply in desirable areas leading to increased costs, even when broader market dynamics differ. Major cities such as London tend to see ever increasing house prices due to its desirability and economic status, not just in the UK but globally.

How Does Price Fluctuation Affect Homeowners and Future Homeowners?

The fluctuation of house prices holds significant implications for both current homeowners and prospective buyers, shaping the financial landscape and influencing key decisions.

Impact on Current Homeowners

For current homeowners, the value of their property is directly tied to market trends. When house prices rise, homeowners experience an increase in the equity of their homes, potentially allowing them to tap into this added value for various financial purposes, such as refinancing or taking out home equity loans.

On the flip side, if prices decline, homeowners may see a reduction in their home's value, potentially affecting their net worth and financial options.

Impact on Aspiring Homeowners

For those aspiring to become homeowners, the state of the housing market determines the affordability and accessibility of purchasing a property.

During periods of rising prices, prospective buyers may face increased challenges in entering the market, requiring higher down payments and potentially limiting their housing options. Conversely, when prices are more stable or decreasing, it may present a more favourable environment for individuals looking to buy their first home.

Impact on the Overall Property Market

The ebb and flow of house prices also impacts the overall stability of the property market, influencing the economic health of an area. Sharp and unexpected increases or decreases can have cascading effects, impacting lending practices, construction trends, and overall consumer confidence. This, in turn, can shape the broader economic landscape and impact job markets and investment opportunities.

Staying informed about these trends is essential for making informed decisions and navigating the dynamic nature of the housing market.

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Methodology and Data Sources

The house prices for this study were sourced via the most recent House Price Index on GOV.uk.

The top and bottom locations were found by comparing house prices in January 2023 to December 2023 and ranking them.