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House prices fall again in December but no crash coming

Nick Cheek
Written By:
Nick Cheek
Posted:
Updated:
15/02/2023

The average price of a house in the UK declined by 0.4% month on month to £294,329 in December.

According to data from the Offic for National Statistics, annual growth was 9.8%. This was slight down on the 10.3% annual increase reported in November. 

Regional figures

In England, average house prices fell by 0.2% to £315,119. Annually, this was a 10.3% rise. 

The East Midlands experienced the largest yearly increase in house prices, with 12.3% growth taking the average value to £256,159. This was followed by the North West, which increased by 12.2% to £221,101. 

London saw the lowest year-on-year growth (6.7%) to £543,099. 

House prices in Wales have increased by 0.7% since November to £222,402. On an annual basis, this represented a 10.3% uplift. 

In Scotland and Northern Ireland, annual increases of 5.7% and 10.2% took average house prices to £187,224 and £175,234 respectively. On a monthly basis, these were declines of 2.9% in Scotland and 0.5% in Northern Ireland. 

No crash on the horizon 

Experts acknowledged the dip in prices but most noted that this was a slowing or a correction more than the outright house price crash that some had predicted, particularly after the disastrous mini Budget.

Myron Jobson, senior personal finance analyst, interactive investor, said: “Official data on home prices confirms the slowdown prognosis from other, more up-to-date, house price indices. Despite a modest slowing in house price inflation, growth is still high – remaining in double digits in some regions.”

Charlotte Nixon, mortgage expert at Quilter, agreed with the assessment that the drop was more shallow that expected.

She said: “While prices have slowed somewhat over the last few months, the annual price rise remains at 9.8% and the average UK property now costs £294,329.

“A further drop in house prices comes as little surprise, though it is likely some would have expected a larger fall by this stage.”

However, Sarah Coles, head of personal finance at Hargreaves Lansdown gave a more gloomy outlook.

She said: “House prices were on the slide in December, and this is just the start of what’s likely to be an increasingly slippery slope.

“Prices were tipped over the edge by mortgage hikes, and we can expect momentum to sustain monthly slides until eventually the annual figures hit negative territory. There’s plenty of disagreement over how far they’ll fall – and how long for – but there remains a broad consensus that we’re heading downhill.”