UK house prices fell in December, official data showed on Wednesday, although the rate of decline slowed notably.
According to the provisional estimates from the Office for National Statistics, house prices fell by 1.4% at the end of 2023, compared to a revised 2.3% drop in November.
Month-on-month, prices rose by 0.3% on a seasonally-adjusted basis.
The average UK house price was £285,000, down £4,000 on December 2022.
The UK housing market has been hit hard by higher interest rates, the cost of living crisis and a surge in mortgage rates following then prime minister Liz Truss’s disastrous mini-budget.
However, with inflation now at 4%, most analysts expect the Bank of England to start trimming rates later this year. Mortgage rates have also started to fall back.
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: “The official measure probably will tick down over the next couple of months, despite the recent rollover in mortgage rates, as it is based on completed sales financed with mortgages that were arranged several months beforehand.
“We continue to expect a 5% peak-to-trough fall, though the risks appear to be skewered towards a smaller decline.
“Further ahead, we expect the official measure to follow the Nationwide measure and start to rebound as the fall in mortgage rates and recovery in real incomes boosts affordability.
“All told, we expect the official measure of house prices to rise by about 5% over the final three quarters of 2024, reaching its previous peak by the end of the year.”
The ONS calculates the House Price Index using data from HM Land Registry, Registers of Scotland and Land and Property Services Northern Ireland.
From March, the ONS will publish the HPI as part of its new monthly bulletin on private rent and house prices, rather than as standalone data.
