According to Savills, this was below the peak in property prices recorded in 2022, but the housing value is still higher than the pre-pandemic period.
Lucian Cook, head of residential research at Savills, said: “Despite higher mortgage costs, the market’s resilience means UK housing continues to be a significant – and a relatively secure – store of wealth. Even after deducting outstanding mortgage debt of £1.6trn, our figures show that net housing wealth continued to exceed £7trn; a figure 2.6 times the size of the UK’s economy.”
Cook said the value of housing was boosted by £80bn in new housing delivery. He added that the market was “insulated from interest rate pressures by a combination of more stringent mortgage regulation, the increased use of fixed rate mortgages and the assistance provided by lenders to those in financial difficulty”.
Cook added: “We may see the cost of mortgages ebb and flow over the course of 2024, as markets respond to changing expectations of when and how much the Bank of England (BoE) will cut the base rate. But, over the medium term, we expect affordability pressure to ease, meaning that the recent loss in value should be short-lived.”
House price falls in the South
The South of England is where most house price falls were recorded, Savills said.
The value of residential houses in London fell by 2.1 per cent – or £39.3bn – while values dropped by 0.5 per cent – or £16.5bn – across the South West, South East and East of England combined.
House prices rose by 3.2 per cent in Northern Ireland, which was the largest annual increase. In the North East, a 1.4 per cent uptick was recorded, followed by Scotland and the East Midlands, where values rose by 1.3 per cent apiece.
Outright owners benefit the most
Homes that are owned outright accounted for nearly 40 per cent of all the UK’s housing value, meaning homeowners without a mortgage saw the most gains.
The Savills data showed that the value of property held by unmortgaged owners rose by £1.5trn over the last decade, compared to the £978bn growth for mortgaged homeowners.
Cook said: “Back in 2013, the value of housing held by unmortgaged and mortgaged owner-occupiers was very similar. However, demographic changes and a shift in access to homeownership have substantially widened the gap between the two in the last 10 years.
“We continued to see people who benefitted from the homeownership boom of the latter part of the 20th century joining the ranks of the mortgage-free in 2023. But, at the same time, aspiring homeowners had to contend with a combination of high deposit requirements and increased mortgage costs last year.
“Meanwhile, increased taxation and regulation have constrained supply in private rented sector (PRS) housing, despite rising tenant demand.”
