Average house price in the UK 2007-2023
House prices in the United Kingdom (UK) started to decline after peaking in July 2022. As the market stood in December 2023, the average price for a home stood at approximately 284,691 British pounds. That figure refers to all property types, including detached, semi-detached, terraced houses, and flats and maisonettes. Compared to other European countries, the UK had some of the highest house prices.
Why have house prices started to decline?
House prices are affected by multiple factors, such as mortgage rates, supply, and demand on the market. For nearly a decade, the UK experienced uninterrupted house price growth as a result of strong demand and a chronic undersupply of the market. Homebuyers who purchased a property at the peak of the housing boom in July 2022 paid 14 percent more compared to what they would have paid a year before. Additionally, 2022 saw the most dramatic increase in mortgage rates in recent history. Between December 2021 and December 2022, the 10-year fixed mortgage rate doubled, adding further strain to prospective homebuyers.
Is it more affordable to rent?
When considering the monthly mortgage or rental payments, owning a three-bedroom house was more affordable than renting in most of the UK regions in 2022. Nevertheless, this does not consider the deposit that homebuyers had to put up for the home purchase. In the past, house prices have increased at a faster rate than rents. As buying becomes less affordable, demand for rental properties is expected to rise, driving rents up.