Mapped: The highest and lowest average house prices in the UK at the end of 2023

Average house prices in each region of the UK are revealed in a new index which says the market “exceeded expectations” in 2023 despite higher taxes, inflation and the wider reduction in the cost of living.

The Halifax House Price Index said property values rose 1.7 per cent across the board in 2023, although in some regions, such as the south-east of England, house prices fell significantly.

Meanwhile, in other regions, such as Northern Ireland and the north-west of England, the average house price rose in good news heading into 2024 for those already on the property ladder.

Overall, median house prices rose 1.1 percent month-on-month in December, the third consecutive monthly increase. The typical UK house price in December 2023 was £287,105, up from £282,305 in the same month a year earlier.

Kim Kinnaird, director of Halifax Mortgages, said that although there was “encouraging” growth in the final three months of last year, this was preceded by falls in property prices for six consecutive months between April and September.

He also warned that the growth “we have seen is likely to be driven by a shortage of properties on the market, rather than the strength of buyer demand”. He added: “That said, as mortgage rates continue to decline, we may see an increase in buyer confidence in the coming months.”

Northern Ireland saw by far the largest annual increase in house prices, according to the Halifax Index. The average house price there in December 2023 was £192,153, up 4.1 per cent on December 2022.

Scotland came in second, with the average house price there standing at £205,170, an increase of 2.6 per cent over the 12-month period.

The south-east of England, which has some of the most expensive properties in the country, saw the biggest drop in prices. The average house price in the region in December was £376,804, down -4.5 per cent.

South West England saw the second biggest drop, with the average property there costing £293,067, a reduction. -3.9 percent. See below for a full list of how each region fared.

Mortgage lenders have this week begun cutting rates in anticipation of the Bank of England cutting interest rates in the spring as the economic outlook improves, making it cheaper to borrow money.

Analysts say the market is “heating up” and a price war between lenders has already begun, but some homeowners still face a painful increase in your monthly costs when offers expire this year.

Thursday Monetary dataThe financial information service said the average cost of a two-year deal had fallen from 5.92 percent to 5.87 percent, the lowest level in almost seven years.

Analyst says mortgage market is “heating up”

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But while mortgage rates have begun to fall, they remain much higher than people have been accustomed to in recent years, and more than a million homeowners expect an increase in their monthly payments when agreements expire this year.

“The mortgage market may be heating up, but this will not completely ease the pain for the estimated 1.6 million existing borrowers with cheap fixed rate deals expiring this year,” explained Alice Haine, personal finance analyst at Bestinvest.

Lenders have priced in that the Bank will begin cutting interest rates this year and have been cutting their prices for months ahead of an expected price war as the economic outlook improves further this year.

Analysts expect rates to fall further by the end of the year. Polly Gilbert, marketing director at Tembo Money, said a mortgage price war was “likely” on the horizon as inflation and interest rates fell. “It’s good to see interest rates finally moving in the right direction,” she told Sky News. “We’re seeing some frenzy starting to build, and this time it’s positive.”

First Direct became one of the latest lenders to announce it was cutting rates, with offers below 4 per cent becoming available from Friday. The announcement followed rate cuts by other lenders this week, including HSBC UK and Halifax.