Housing stock value fell £27bn last year, but it's still worth £8.6tn - Savills

14 February 2024 , 09:50

476 0

A view of London, where the overall value of housing stock fell last year, according to Savills (Image: PA Wire/PA Images)

The UK's housing stock lost around £27 billion in value last year, due to higher mortgage costs and financial pressures on households, according to new research..

Despite this, the total value of housing is still about £1.585 trillion more than it was in 2019 before the Covid-19 pandemic hit, says property firm Savills. Savills added that the decline in overall housing values last year was the first since 2012. The total value of all homes across the UK now stands at £8.678 trillion.

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 added: "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."

8 money changes coming in February including Universal Credit and passport fees

The research showed that the fall in property prices last year was concentrated in southern England. On the other hand, Scotland, Northern Ireland, northern England and the Midlands saw an increase in the overall value of properties.

Mr Cook explained: "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."

According to the research, the major winners continue to be the outright owner-occupiers, with homes owned outright now making up almost 40% of the total value of all UK housing. In fact, the research by Savills disclosed that the value of property held by mortgage-free owner-occupiers has increased by £1.505 trillion over the past ten years, while that held by mortgaged owner-occupiers has risen by £978 billion.

Mr Cook continued: "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."

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