Prices dipped but still remain above pre-pandemic levels, according to Halifax. Find out what the lender thinks 2023 will have in store for the property market.

House prices in the UK fell by 1.5% in December compared to 2.4% in November, according to Halifax’s latest House Price Index. The average UK property price now stands at £281,272 compared to £285,425 last month. All regions in the UK saw annual growth slow.

‘The fall in December was lower than the monthly decline of 2.4% recorded in November, even taking into account seasonal slowdown driven by the festive period,’ says Kim Kinnaird, Director, Halifax Mortgages. ‘As we’ve seen over the past few months, 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.’

A mixed property market

Halifax says the market was mixed in 2022 and other industry experts referred to last year as a ‘tale of two halves’. Kinnaird adds: ‘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 the cost-of-living pressures, coupled with a rising rates environment, began to take effect on household finances and demand.’

Despite the slight reduction of prices in December, house prices in general remain high, greater than at the start of 2022 and 11% more than prices at the start of 2021. ‘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 to around -8% over the course of the year,’ adds Kinnaird.

Helping first-time buyers

An 8% decrease in prices may not sound like good news, but it will help first-time buyers and also has to be put into perspective. ‘It’s important to recognise that a drop of 8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels,’ says Kinnaird.

The North East of England has seen the greatest slowdown in annual growth, with prices rising by 6.5% annually, compared to 10.5% the previous month.

Eastern England, West Midlands and Wales saw the smallest reductions in annual growth rate, with East of England prices now up by 5.5% compared to 7.2% in November and West Midlands prices up by 7.3% compared to 9.1% in November. Wales saw growth down from 7.7% to 6.1%.

London saw annual growth of 2.9% compared to 5% last month.  The cost of an average home in London is now £541,239.

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