Around £27 billion was wiped off the value of the UK’s housing stock last year, amid higher mortgage costs and affordability pressures on households, analysis suggests.
Despite the dip, the total value of housing is still around £1.585 trillion higher than it was in 2019 before the coronavirus pandemic struck, property firm Savills said.
It added that last year’s decline in overall housing values was the first since 2012.
The total value of all homes across the UK stands at £8.678 trillion, Savills said.
Lucian Cook, head of residential research at Savills, said: “Despite higher mortgage costs, the market’s resilience means UK housing continues to be a significant, and a relatively secure, store of wealth.
“Even after deducting outstanding mortgage debt of £1.652 trillion, our figures show that net housing wealth continued to exceed £7 trillion.”
He continued: “In 2023, the total value was supported by an £80 billion uplift from new housing delivery. But, more fundamentally, the market was insulated from interest rate pressures by a combination of more stringent mortgage regulation, the increased use of fixed-rate mortgages and the assistance provided by lenders to those in financial difficulty.
“We may see the cost of mortgages ebb and flow over the course of 2024, as markets respond to changing expectations of when and how much the Bank of England will cut the base rate. But over the medium term, we expect affordability pressure to ease, meaning that the recent loss in value should be short-lived.”
Last year’s value falls were concentrated in southern England, researchers said.
By contrast, there were uplifts in the overall value of properties in Scotland, Northern Ireland, northern England and the Midlands.
Mr Cook said: “A geographical rebalancing of the UK housing market continued in 2023.
“As expected at this stage in the cycle, the most robust regional markets were those where mortgaged buyers had to borrow less in relation to their income.”
Outright owner-occupiers continue to be the major beneficiaries of value growth, researchers said.
According to Savills, homes owned outright now account for almost 40% of the total value of all UK housing.
The analysis indicated that the value of property held by mortgage-free owner-occupiers has increased by £1.505 trillion over the past decade, while that held by mortgaged owner-occupiers has risen by £978 billion.
Mr Cook said: “Back in 2013, the value of housing held by unmortgaged and mortgaged owner occupiers was very similar. However, demographic changes and a shift in access to homeownership have substantially widened the gap between the two in the last 10 years.
“We continued to see people who benefited from the homeownership boom of the latter part of the 20th century joining the ranks of the mortgage-free in 2023. But at the same time, aspiring homeowners had to contend with a combination of high deposit requirements and increased mortgage costs last year.
“Meanwhile increased taxation and regulation have constrained supply in the private rented sector housing, despite rising tenant demand.”
Savills used a combination of sources for its research, including the Census, the English Housing Survey and Land Registry data as well as Office for National Statistics (ONS) figures and Nationwide house price data.
Here are the values in housing stock in 2023 and the decrease or increase compared with 2022, according to Savills:
London, £1.825 trillion, minus £39.3 billion
South East, £1.630 trillion, minus £6.1 billion
East of England, £975 billion, minus £6.4 billion
South West, £845 billion, minus £4.0 billion
North West, £680 billion, plus £3.0 billion
West Midlands, £607 billion, plus £5.2 billion
East Midlands, £514 billion, plus £6.5 billion
Yorkshire and the Humber, £489 billion, plus £3.8 billion
Scotland, £481 billion, plus £6.2 billion
Wales, £299 billion, minus £2.8 billion
North East, £186 billion, plus £2.5 billion
Northern Ireland, £147 billion, plus £4.6 billion
