Annual UK house price growth fell back to 9.8% in the 12 months to December 2022, according to the latest UK House Price Index from the Office for National Statistics (ONS).

This was down from 10.6% in the year to November and continues the fall from the recent annual peak of 14.2% in July.

The figures mean the average UK house price fell back to £294,000 in December, although this is still £26,000 higher than it was 12 months ago.

On a month-by-month basis, the average UK house price fell by 0.4% between November and December, following an increase of 0.2% in the previous month.

ONS figures also showed that regionally, average house prices increased over the 12 months to £315,000 (10.3%) in England, £222,000 in Wales (10.3%), £187,000 in Scotland (5.7%) and £175,000 in Northern Ireland (10.2%). The ONS also stated that Scotland's annual house price inflation has generally been slowing since April 2022, reaching 5.7% in the 12 months to December, down from 13.9% in the year to April.

The East Midlands saw the highest annual percentage change in the year to December (12.3%), while London saw the lowest (6.7%) of all English regions.

Commenting on the latest ONS index, head of mortgages at Atom bank, Richard Harrison, said: “The latest data broadly aligns to the trends reported in the Halifax and Nationwide house price indices, which point towards prices cooling over the near term. It’s hard to see a recovery in prices materialising in the immediate term.

“Several factors are creating a downward pressure, such as wages falling in real terms due to high inflation and many facing the challenge of raising a deposit due to the ongoing cost of living crisis and recent house price growth.
 
“More positively, headline mortgage pricing has fallen during 2023, which will provide some support to customers' affordability through lower monthly mortgage repayments. Prices have adjusted slightly on the back of affordability pressure, but a more pronounced change should be avoided on the grounds that employment levels remain steady, which should avoid any widespread forced selling.
 
“With today’s data showing London to be the English region with the lowest annual growth, there is a greater possibility of prices here and around the South East remaining more constrained because these are the areas where affordability challenges are being most keenly felt by borrowers.”

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