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Analysis of movement in house price indices

Published: 19/02/2024

Each month, Halifax, Nationwide and the Office for National Statistics (ONS) publish house price indices, tracking the movement in average house prices in the UK. Halifax and Nationwide updates are based on mortgage approvals data, while ONS figures are based on sales data from HM Land Registry, Registers of Scotland, and Property Services Northern Ireland.

Cautious optimism remains with average house price movement

Annual movement in UK house prices was up in January 2024 by Halifax’s measure, but down according to Nationwide’s house price index, latest figures show. 

Halifax reported a 2.5% annual increase in house prices, the highest rate since December 2022, while Nationwide’s index showed a decrease of 0.2% on the same period. 

On a monthly basis, Halifax said prices were up 1.3% on December 2023, while the Nationwide index showed a 0.7% increase. 

Halifax’s Mortgages Director said that, while housing activity has increased over recent months, interest rates remain elevated compared to recent historic lows and demand exceeds supply.  Further, they said ‘modest falls should not be ruled out, against a backdrop of broader uncertainty in the economic environment’. 

Nationwide’s Chief Economist said that the interest rate outlook remains highly uncertain but that, ‘while a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive.’ 

The ONS HPI, with the latest data for December 2023, showed a 1.4% drop in house prices compared with December 2022. As the ONS figures cover house sales that may have been agreed months previously, there tends to be a lag in the data.

Source: Halifax (Methodology), Nationwide (Methodology), ONS (Methodology)

On a regional basis, Nationwide, based on the percentage change of a four-quarter moving average, reported decreases almost across the board, from –0.5% in Yorkshire and The Humber to –5.2% in East Anglia. Only Northern Ireland and Scotland showed positive growth, with 4.5% and 0.5% increases respectively.

Source: Nationwide

Karl Horton, Chief Data Officer at BCIS said: ‘The comments from Nationwide and Halifax reflect a cautious optimism that we’re seeing on the construction side of housing too. However, while reduced mortgage rates seem to also be having a positive impact for house builders and their reservation rates, the industry still faces significant economic challenges. 

‘With the Bank of England’s Monetary Policy Committee voting at the beginning of the month to retain the base rate at 5.25%, where it has been since August 2023, the impact of high interest rates is likely to be felt for some time. 

‘The latest construction output and new orders data shows the difficulties the private new housing sector has faced and continues to face. Output was down 22.5% in 4Q2023, compared with 4Q2022, and 8% down on 3Q2023. New orders were down 28.9% in 4Q2023 compared with 4Q2022 and 14.4% lower than 3Q2023.

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