House prices fell by nearly 2 per cent during 2023 according to the Nationwide leaving the average price at £257,000. Even with this drop in prices, the FT reports that a deposit paid by a typical first-time buyer would be 105% of their average annual gross income; the typical monthly mortgage payment would be 38% of take-home pay, well above the long-run average of 30 per cent.

The fall in property prices reflects broader weakness in the UK economy exemplified by falling real disposable incomes and subdued consumer confidence. Most of all, the sharp rise in mortgage interest rates has had an impact on demand. Well over a million home-buyers face a significant increase in their monthly mortgage payments during 2024 when fixed rate deals come to an end. The Nationwide is predicting that house prices will fall again in 2024 even though the Bank of England may start edging policy interest rates lower in the spring / early summer.