Annual house price growth dropped to 2.0% in December, a significant fall from 4.6% in November, according to figures from the latest Halifax House Price Index.

December also saw the average UK house price fall by 1.5% on a month-by-month basis, to follow a 2.4% fall decline in November.

The latest changes to the housing market have left the average UK house price at £281,272.

Halifax stated that uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, is leading to an “overall slowing of the market”.

Director at Halifax Mortgages, Kim Kinnaird, described the housing market as a “mixed picture” in 2022.

“We saw rapid house price growth during the first six months, followed by a plateau in the summer before prices began to fall from September, as the impact of cost of living pressures, coupled with a rising rates environment, began to take effect on household finances and demand,” Kinnaird said.

“These trends need to be viewed in the context of historic prices. The cost of the average home remains high – greater than it was at the start of 2022 and over 11% more than house prices at the beginning of 2021. The first half of last year was a very strong period for sellers, between January 2022 and August 2022, the average cost of a home rose by over £17,000
to £293,992 (growth of +6%), setting a new record high.

“As we enter 2023, the housing market will continue to be impacted by the wider economic environment and, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall, with house prices forecast to fall around -8% over the course of the year.

“It’s important to recognise that a drop of8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.”

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