The UK’s house prices continue to fall

Average house prices in the UK have fallen for the fourth consecutive month with the prospect that an annual price fall is likely, Halifax reports.

In December, average house prices fell by -1.5% and the annual rate of growth dropped to +2.0%.

According to the data, the average UK property now costs £281,272, that’s down from November’s £285,425.

The price falls were recorded in all regions and nations.

‘Leading to an overall slowing of the market’

Kim Kinnaird, the director of Halifax Mortgages, said: “As we’ve seen over the past few months, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, is leading to an overall slowing of the market.

“These trends need to be viewed in the context of historic prices. The cost of the average home remains high – greater than it was at the start of 2022 and over 11% more than house prices at the beginning of 2021.”

Ms Kinnaird added: “As we enter 2023, the housing market will continue to be impacted by the wider economic environment and, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall, with house prices forecast to fall around 8% over the course of the year.

“It’s important to recognise that a drop of 8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.”

‘Led to an expensive winter for many households’

Emma Cox, the managing director at Shawbrook, said: “The continual raising of interest rates by the Bank of England coupled with the ongoing cost of living and energy crises has led to an expensive winter for many households.

“This challenging economic climate has filtered through to the housing market, as it now enters a fourth successive month of price falls.”

She adds higher mortgage rates and soaring inflation have seen a reduction in transaction numbers – and the market looks set to experience a ‘price correction’.

Ms Cox said: “Yet whilst first-time buyers are holding out for more stable times before making their leap onto the housing ladder, it’s likely we’ll still see opportunistic landlords capitalising on lower prices and market uncertainty to build their portfolios.

“With figures at the end of 2022 also pointing to an increase of buy-to-let limited companies, it could also suggest a further professionalisation of the buy-to-let market in the coming months.”

‘A miserable December for house prices’

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, said: “It was a miserable December for house prices, as the rot set in, and prices slumped again.

“We saw a fourth consecutive monthly price drop, and average prices are now up just over £5,000 in a year.

“While this month’s fall was less spectacular than November, it was more comprehensive – as prices fell in every region across the UK. This is a world away from June when they were up 12.5% in a year.”

She adds that the current figures reflect a three-month lag between agreeing a sale and completion which the data shows buyer confidence in September – which only included a single week after the mini-Budget.

Ms Coles said: “A major chunk of these sales were based on mortgages that had already been approved, so the chaos unleashed in the mortgage market by Kwasi Kwarteng’s announcement won’t necessarily have personally affected these buyers.”

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