What happened to the housing market in 2023?

The 2023 UK housing market saw one million house sales, according to property website Zoopla. Rising bank rates led to mortgage cost increases and a 1.2% fall in UK average house prices. In the lettings sector, the cost of renting a property rose and demand increased as higher mortgage saw first-time buyers putting off the decision to purchase.

Here are the key takeaways from the year in property:

Interest rates

The Bank of England put its base rate up a total of five times in 2023, by 0.25% in March, May and August, and 0.5% rises in January and June, taking it from 3.5% in January to 5.25% today. This translated into higher mortgage costs for borrowers with the average two-year fix hitting a peak of 6.44% in July before falling to its current level of 5.94%.

House prices

UK average house prices fell by 1.2% across the country and 2% in London. Sellers were advised to be realistic in terms of pricing and the UK average seller discount stood at 5.5%. “That said,” according to Zoopla, “property prices remain well above what they were before the pandemic, even in the places with the biggest house price falls.”

Leasehold reform

The year also heralded long-awaited reforms to leasehold properties. The Leasehold and Freehold Reform Bill, announced in the King’s Speech in November, aims to make it cheaper and easier for leaseholders to either extend their lease or buy their freehold.

Rental market

High demand and lack of supply in the lettings market saw the cost of renting rise throughout 2023, with average rents as a percentage of gross earnings reaching 28.4%.

The year saw landlords waiting to hear when the Renters Reform Bill would become law, bringing an end to Section 21 evictions and new grounds for possession. The legislation was put on hold in November until reforms of the courts have been completed.

September also saw Prime Minister Rishi Sunak scrap energy efficiency targets for landlords due to come into force in 2025.

Read more about the year in property on the Zoopla website.

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