According to the Office of National Statistics (ONS), London has recorded the lowest price growth in England in the year to January 2023, with house prices remaining the most expensive of any region in the UK.
The annual increase of 3.2 per cent in January took the average cost of a home in London to £534,000. Meanwhile, the North East has topped the chart for house price growth, with prices increasing by 10 per cent in the same period. House prices in the North East average at £163,000, which is the lowest of any region.
The housing market and mortgage borrowers are adjusting to the impact of the cost of living crisis and higher interest rates, and forecasters predict that London prices will fall by between five and 10 per cent this year. Despite this, demand and supply have been solid this year, and sales volumes are expected to catch up against an economic backdrop that is proving stronger than expected.
Across the UK, the annual house price growth has slowed to 6.3 per cent, with the average cost of a UK home now standing at £290,000, which is £17,000 higher than in January 2022. While the drop in annual house price growth in January was attributed to the mini-budget, Tom Bill, head of UK residential research at Knight Frank, believes it tells us very little about how the UK property market will perform this year.
In terms of rental prices, private rental prices in London increased by 4.6 per cent in the 12 months to February 2023, accelerating from a 4.3 per cent rise in the previous 12 months, making it the strongest annual percentage growth since January 2013. Rental prices paid across the UK also increased by 4.7 per cent in the 12 months to February 2023, which is the largest growth since comparable records began in January 2016.
The average house price in Scotland increased by one per cent over the 12 months to January 2023, with the average house price in Scotland being £185,000 in January 2023. In Wales, the typical house price increased by 5.8 per cent over the same period, with the average house price in January 2023 being £217,000. In England, the average property value increased by 6.9 per cent over the 12 months to January 2023, with the average house price being £310,000 in January 2023. Northern Ireland saw the highest annual house price increase of 10.2 per cent, with the average house price standing at £175,000.
Overall, annual house price inflation, measured using final transaction prices, slowed again in January, consistent across all nations and regions. However, UK rental prices continued to climb, with the strongest growth since records began in 2016. The surge in London’s rents remained evident with the highest annual percentage increase in over a decade.
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