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UK house price growth slows in December

House prices  A person looking at a smartphone walks past a branch of Dexters estate agents in Islington, London, Britain, December 10, 2021. Picture taken December 10, 2021. REUTERS/May James
House prices continue losing streak according to Nationwide. Photo: May James/Reuters

UK house prices have fallen for the fourth month in a row, marking the longest run of declines since the 2008 financial crisis, according to Nationwide (NBS.L).

The average home sold for £262,068 during December, down by a little over £1,700 compared to November.

The annual growth rate cooled to 2.8% in December from 4.4% in November, Nationwide said. This is the lowest since July 2020, when it was 1.5%.

“Prices fell by 0.1% month-on-month ⁠— a much smaller decline than in the previous couple of months,” said Nationwide’s chief economist, Robert Gardner.

“However, December also marked the fourth consecutive monthly price fall ⁠— the worst run since 2008, which left prices 2.5% lower than their August peak.”

Read more: UK cities where house prices have risen most and least in 2022

Gardner said there was some reason for potential sellers to be optimistic looking into 2023.

Interest rates on home loans are easing back from the high levels they reached following the mini-budget in September.

Meanwhile, wages are growing fairly rapidly ⁠— at about 7% ⁠— so people might be able to spend more on their homes, he said. However, those pay rises are still lower than inflation.

“But the main factor that would help achieve a relatively soft landing (especially for house prices) is if forced selling can be avoided, and there are good reasons to be optimistic on that front,” Mr Gardner said.

“Most forecasters expect the unemployment rate to rise towards 5% in the years ahead ⁠— a significant increase, but this would still be low by historic standards.”

“Moreover, household balance sheets remain in good shape with significant protection from higher borrowing costs, at least for a period, with around 85% of mortgage balances on fixed interest rates.”

Read more: The top 10 UK cities to start a business in 2023

The report pointed out that East Anglia was the strongest performing region in 2022, while Scotland was the weakest, and also highlighted that the gap between the weakest and strongest regions was the smallest since Nationwide’s regional indices began in 1974.

The breakdown of UK house prices in the last quarter of this year, and the annual price change, from Nationwide’s housing report:

  • South West, £307,588, 4.3%

  • East Midlands, £233,459, 5.3%

  • Wales, £205,666, 4.5%

  • West Midlands, £240,975, 6.1%

  • North West, £208,600, 6.0%

  • East Anglia, £285,776, 6.6%

  • Yorkshire and the Humber, £199,615, 4.6%

  • Outer South East (includes Ashford, Basingstoke and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton, Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing), £344,027, 4.3%

  • Northern Ireland, £176,637, 5.5%

  • Outer Metropolitan (includes St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham), £428,201, 4.2%

  • North East, £156,892, 5.9%

  • Scotland, £178,269, 3.3%

  • London, £528,000, 4.1%

Read more: Help for first-time buyers scheme extended by a year

Mortgage advisers said the figures are the prelude to a very difficult year.

Adviser at Mather & Murray Financial Samuel Mather-Holgate said: “These are the snowflakes that started the avalanche. People will be in no rush to buy properties at the top of the mountain in the New Year.

“There is plenty of room for prices to fall and I expect little activity in the market until we know where prices decide to settle and that won’t be until late spring. For buyers who are willing to wait until then, that will be the time to bag a bargain.”

He added: “There will be a lot of distressed sellers needing to offload their properties as they cannot cope with the cost of living. I expect interest rates may have peaked by then.”

Watch: How much money do I need to buy a house?