The average UK house price in December 2023 fell by 1.4% year-on-year, standing at £285,000, the Office for National Statistics (ONS) has revealed.

As a result, average house prices dropped by £4,000 in the year to December.

The latest ONS house price index (HPI) report revealed that this yearly change in prices was a slight increase on November 2023, when prices fell by 2.3% annually.

ONS analysis of the separate nations showed that house prices decreased annually in England by 2.1% and by 2.5% in Wales, with the average price standing at £302,000 and £190,000 respectively.

However, average house prices increased in Scotland by 3.3% in the same period, to £190,000.

Furthermore, in the final quarter of the year (October to December 2023), house prices in Northern Ireland jumped by 1.4% to £178,000.

Head of mortgages at Atom bank, Richard Harrison, commented: "The news of a 1.4% decrease in house prices in December will come as little surprise.

"A seasonal dip in asking prices is always expected in the lead-up to Christmas, and the final month of 2023 saw vendors becoming increasingly competitive, reducing their pricing in the hope of closing a sale before the New Year.

"Likewise, higher mortgage rates and stretched affordability for some buyers may have motivated them to offer below the asking price, in a bid to offset the impact of higher borrowing costs. More recent indicators point to increasing house prices as confidence in the market improves, and we should see this reflected in future ONS data."

The North West was the only region in England to see an increase in house prices, jumping by 1.2% in the year to December , with the average house price in the region standing at £218,000.

Despite remaining the most expensive region in the UK with an average house price of £508,000 in December, London saw the biggest drop in house prices year-on-year.

House prices in the capital fell by 4.8% in the 12 months to December, although this was up from an annual inflation rate of -5.5% in the year to November 2023.

The North East remains the cheapest region in England, with an average house price of £158,000. House prices in the region dropped by 0.8% year-on-year to December.

Head of business development at Saffron for Intermediaries, Tony Hall, added: "Confidence in the market, which helps to solidify pricing, is being boosted by lenders competing fiercely on product rates – Moneyfacts recorded the biggest drop in two-year fixed rates since 2022 on Monday. However, the picture is more complex than this, with some rates being priced upward in line with swap rates over the last fortnight.

"Stronger product innovation and the growing shelf life of mortgage deals is also boosting buyer enquiries, as lenders try to find more ways to help as many borrowers as possible find solutions that work for them. The outlook for prices is promising for the year ahead, and we are optimistic that the positive trend seen in today’s figures will continue in the coming months."

---