House price growth sees winter chill in December

All regions recorded a slowdown in annual price growth in the final quarter of the year, with East Anglia the strongest performing region in 2022 and Scotland the weakest.

However, the gap between the weakest and strongest regions was the smallest since Nationwide’s regional indices began in 1974.

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:

“December saw a further sharp slowdown in annual house price growth to 2.8%, from 4.4% in November. Prices fell by 0.1% month-on-month – a much smaller decline than in the previous couple of months. 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 (after taking account of seasonal effects)."

“While financial market conditions have settled, mortgage rates are taking longer to normalise and activity in the housing market has shown few signs of recovery."

“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."

Kylie-Ann Gatecliffe, director at Selby-based broker, KAG Financial:

“Call me an optimist, but I don’t think 2023 is going to be all the doom and gloom that many are predicting. Even if there is a 10% drop in house prices, official data shows that, over the year to August, we saw an increase of 13.6%. There will be less of a housing crash and more of a correction to pre-pandemic prices. As busy as the past two years have been with property sales, it has been tremendously difficult for first-time buyers to get onto the ladder, with many being outbid or simply being priced out of an area. 2023 could be their year. When it comes to selling and buying the reduction is usually seen on both sides, so any drop in prices often negates itself. Lenders are still reducing mortgage rates and I believe these will stabilise into next year.”

Tomer Aboody, director of property lender MT Finance, says:

"As the year draws to a close, this slowdown in house price growth isn't unexpected as financial markets are still to stabilise, leaving buyers uncertain as to where mortgage rates will settle."

"A combination of Covid, the Ukraine war and changes in government, have left the UK in a position where stability is key to growth and confidence. We have probably seen the peak in Swap rates which will help, and are now waiting for more continuous and steady market rates. "

"As the cost of living increases at the same time as rates, buyers are more cautious of taking on bigger commitments, so although we might not see a huge fall in house prices in 2023, a slowdown in transactions will see a slight decrease in pricing."

"We have seen good growth in 2022, especially in the house market where space is still key and in areas which provide good commutes for consumers and green space, such as the South West. This trend is likely to continue, especially as many companies are still happy for staff to work from home."