House prices fell by 0.2% month-on-month in December, marking the first drop in the average price since March, Halifax has revealed.

The bank’s house price index showed that the average UK house price stood at £297,166 in December.

Despite the monthly drop, house prices increased year-on-year by 3.3% in December, although this was the lowest increase since July.

Head of mortgages at Halifax, Amanda Bryden, said the figures are a result of a "broadly steady" housing market at the start of 2024.

She added: "In the latter half of the year, house prices grew in response to the falls in mortgage rates, alongside income growth, both leading to financial pressures somewhat easing for buyers.

"Impending changes to stamp duty thresholds have also given prospective first-time buyers even greater motivation to get on the housing ladder and bring any home-buying plans forward. Together, these elements meant mortgage demand picked up, hitting the highest level in over two years and back to levels seen pre-pandemic."

In terms of regions across the UK, Northern Ireland was the best performer, with house prices increasing by 7.4% annually to £205,895.

House prices in Scotland (£209,959) and Wales (£226,646) also increased by 2.4% and 4.6%, respectively.

In England, the North West saw the largest increase in house prices in this period, jumping by 5.3% to £238,832.

London continued to retain the highest average house price in the UK, increasing by 3.3% year-on-year to £547,614 in December.

Looking ahead to the current year, Bryden stated: "While the housing market has been supported in recent months by falling mortgage rates, income growth and the announcement on upcoming stamp duty policy changes, mortgage affordability will remain a challenge for many, especially as the bank rate is likely to come down more slowly than previously predicted.

"However, providing employment conditions don’t deteriorate markedly from a more recent softening, buyer demand should hold up relatively well and, taking all this into account, we’re continuing to anticipate modest house price growth this year."

Personal finance analyst at Bestinvest, Alice Haine, added: "As cost of living pressures linger and households grapple with an ever-higher tax burden, a result of most personal tax thresholds remaining frozen until at least 2028, it’s understandable that some buyers are still feeling the squeeze. Affordability concerns have eased but they are far from over for many buyers, something that could hold back house price growth as the year unfolds."

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