Monthly UK house price drop worse run for 14 years

The average UK house price dropped for the fourth consecutive month in December, which is the worst run since 2008, according to the Nationwide. 

Month-on-month house prices went down 0.1% between November and December last year, compared to 1.4% between October and November, the building society said.

This meant annual house price growth in the last month of 2022 was 2.8% but they were 2.5% lower than their August peak. The average price of a UK property in December last year was £262,068. 

Robert Gardner, Nationwide’s chief economist, predicted the housing market was likely to “remain tepid until the broader economic outlook improves”. 

“It will be hard for the market to regain much momentum in the near term as economic headwinds strengthen, with real earnings set to fall further and the labour market widely projected to weaken as the economy shrinks,” he added. 

The housing market took a hit after the mini-Budget in September last year, which saw mortgage rates reaching 14 year highs. 

It has since stabilised but, Gardner warned, “the housing market has shown few signs of recovery” and forced selling needed to be avoided to “help achieve a relatively soft landing” next year.  

However, he said: “The fact that the housing market remained buoyant in the first three quarters of 2022, despite weak consumer confidence on the back of a stagnant economy, falling real incomes and a near tripling of mortgage rates, provides some reassurance that there will be a pickup in activity in the New Year.” 

What provided a “good reason to be optimistic” was that while forecasters expected the unemployment rate to rise towards 5% in the coming years, that figure is still low by historic standards. 

Lawrence Bowles, director of research at Savills, said: “With the Bank of England still set to raise rates further and no sign yet of any significant reduction in mortgage rates, we’re expecting to see slower housing market activity in the mainstream markets over the next twelve months.”

Zaid Patel, director at London-based estate agents Highcastle Estates, said: “December was always going to be a write-off, with the World Cup adding to the usual seasonal drop-off in demand and the soaring cost of living crisis.” But he added: “January will see cash- and mortgage-ready buyers carefully analysing the market, pouncing on any good deals, which will prevent the housing market from crashing.”

Gary Bush of the Potters Bar-based MortgageShop.com, suggested: “The continued decline in annual price growth in December was always on the cards as the fall-out from the mini-Budget continued. Property prices in 2023 are almost certainly set to undergo a correction after the crazy highs of the past two years and the strength of the economic headwinds.”