Average house price RISES by £17,500 this year - but demand has fallen

House prices are around £17,500 higher on average than at the start of 2022, according to a property website.

Zoopla said property values have increased by 7.2% across the year – but it added that there has been a sharp fall in demand since the summer.

The average UK house price is £258,100.

Weaker demand from higher mortgage rates, cost-of-living pressures and low consumer confidence is hitting price growth, the website said.

Sellers are accepting bigger discounts to their asking prices to achieve sales, with 4% being knocked off prices typically.

Zoopla’s report said: “We expect discounts to widen further in 2023.”

The website said demand in some coastal and rural areas, including parts of mid-Wales and the Lake District, has weakened amid higher prices and economic uncertainty.

Buyer interest in affordable, accessible urban areas is holding up better, including in places such as Bradford, Swindon, Coventry, Crewe, Southend and Milton Keynes, Zoopla added.

Looking ahead to 2023, affordable urban areas and apartments are expected to see pricing perform better than the UK market generally.

When it comes to property types, flats have underperformed compared with the rest of the market and are likely to see increased demand in 2023 as buyers seek better value for money, Zoopla predicted.

Richard Donnell, executive director at Zoopla, said: “We expect buyers to return to the market in the new year, but they will be far more cautious and price sensitive.

“Serious sellers need to be realistic on price and get the advice of an agent on how to market their home. While mortgage rates will start 2023 lower, the impact on pricing will be felt more in the higher value markets of southern England than the more affordable markets elsewhere.”

Chris Druce, senior research analyst at estate agent Knight Frank, said: “After a frenetic period for the country market, city living has come back strongly as workers have returned to the office, and the lifting of pandemic restrictions have boosted the appeal of urban living.”