House prices dropped by 0.6% year-on-year in January, following a 2.2% fall in December, the Office for National Statistics (ONS) has found.

In its monthly house price index report, the ONS revealed that the average price for a property in the UK stood at £281,913 in January.

Despite the annual drop, prices increased by 0.5% month-on-month.

Across the nations, in the 12 months to January, house prices in England fell by 1.5% to an average price of £299,000.

In Wales, prices decreased by 0.8% to £213,000, while prices increased by 4.8% in Scotland to £190,000.

In Northern Ireland, house prices increased to £178,000 (1.4%) in the quarter to December 2023.

Head of mortgages at Atom bank, Richard Harrison, said: "There are signs that house price falls are starting to slow, with January’s figures from the ONS showing house prices fell by just 0.6% in the 12 months to January.

"Ongoing economic pressures and affordability constraints at the start of the year meant that buyer confidence did not fully return to the housing market.

"Looking ahead, while the jury is still out on whether we will see further house prices fall in Q2, the news last week that the UK economy returned to growth in January should in part help boost buyer confidence."

In terms of regions in England, only the North West and the West Midlands recorded an increase in annual house prices, jumping by 1% and 0.6% respectively.

These regions now stand at £215,082 and £248,758 respectively.

London (£517,726) saw its average house price drop by 3.9% year-on-year, with the North East (£154,948) also falling by 3.1% year-on-year.

Head of personal finance at Hargreaves Lansdown, Sarah Coles, added: "This is a very early glimpse of the January joy, which suffused the property market at the start of 2024, and encouraged a decent chunk of buyers and sellers to rejoin the property party. These figures actually reflect sales in the autumn, when mortgage rates were higher – but on their way down – and they have already had a positive impact.

"Since the start of the year, buyer enthusiasm has been tested by small mortgage rate rises. There are early signs that it has stood up to the test, with more buyers coming back in February too. There’s also the hope that with inflation coming in lower than expected today, and the Bank of England expecting to hold rates where they are, we could see mortgage rates hold steady, and eventually start to drop again towards the summer."

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