Annual house price growth slows to 9.8%: UK HPI

Average UK house prices increased by 9.8% in the 12 months to December 2022, down from 10.6% in November, according to the latest UK House Price Index from the ONS and Land Registry.

The average UK house price was £294,000 in December, which is £26,000 higher than 12 months ago but down from November's record high of £296,000.

House prices decreased by 0.2% between November and December on a seasonally adjusted basis, and by 0.4% on a non-seasonally adjusted basis.

Average house prices increased over the 12 months by 10.3%, 10.3% in Wales, 5.7% in Scotland, and 10.2% in Northern Ireland.

Scotland's annual house price inflation has generally been slowing since April 2022, reaching 5.7% in the 12 months to December, down from 13.9% in the 12 months to April.

The East Midlands saw the highest annual percentage change in the 12 months to December (12.3%), while London saw the lowest (6.7%) of all English regions.

Andy Mielczarek, founder and CEO of SmartSave Bank, said: “House price growth was clearly slowing by the end of last year. But it is crucial we remember that the ONS's house price data tracks a couple of months behind other indices, most of which are suggesting that prices are now in decline. Indeed, perhaps the headline from the ONS data was that the average UK house price dropped by £2,000 between November and December 2022. As a combination of the cost-of-living crisis and rising interest rates dampens buyer demand, the question is just how far will house prices fall?

“Those looking to move home, or take their first step onto the property ladder, will be watching on with great interest. No doubt, many will sit tight in the hope that prices become more and more affordable over the coming months. But in the meantime, they must be diligent in how they are managing their own finances, particularly their savings.

“While keeping a keen eye on price movements, would-be buyers could also focus on building up their deposit. Right now, we are seeing great interest in one- and two-year savings accounts which, thanks to rising interest rates, are now providing increasingly attractive rates to those ready to put aside some or all of their cash savings to allow it to gain value. If indeed house prices continue to slide, those who use this time wisely to boost their savings will find themselves in a stronger position when they choose to enter the market."

Director of Benham and Reeves, Marc von Grundherr, commented: “A combination of economic turbulence, increasing mortgage rates and a squeeze on household finances has been the perfect recipe for a reduction in the rate of house price growth and that’s what we’ve seen since the closing stages of last year.

"When you also couple these factors with the usual seasonal slowdown that hits the market during December, it would have been more of a surprise had house prices continued to climb.

"However, what’s important to note is that the rate of decline has been far more marginal than many predicted and this should stand the property market in very good stead for the year ahead.”