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December dip makes small dent in rising house prices

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Average house prices fell by -1.5% in December, while the annual growth rate dropped from +4.6% to +2.0%, according to the Halifax House Price Index.

A typical property now costs �281,272 - down from �285,425 in November '� following six months of rapid growth during the first six months of 2022, before cost-of-living pressures, coupled with rising interest rates, began to impact household finances and demand.

Greatest slowdown

Over the last year, the North East saw the greatest slowdown, with annual house prices rising by +6.5%, compared to +10.5% the previous month. Eastern England, the West Midlands and Wales experienced the smallest falls in growth rate.

Kim Kinnaird, director at Halifax Mortgages, says these trends need to be viewed in the context of historic prices. 'The cost of the average home remains high '� greater than it was at the start of 2022 and over 11% more than house prices at the beginning of 2021,'� she says. 'As we enter 2023, the housing market will continue to be impacted by the wider economic environment and, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall, with house prices forecast to fall around 8% over the course of the year.'�

Underlying demand

However, estate agency Chestertons believes there won'�t be the widely anticipated drop in values this year. Instead, prices will see only a slight dip before a 1.3% increase in England and Wales and rapid growth of up to 10% in London in 2024. The firm says strong underlying demand for homes combined with fewer-than-expected forced sales will cushion prices.

Sebastian Verity, head of research, explains: 'We expect 2023 to be characterised by a slower property market during which around 25% fewer properties will come onto the market and change hands compared to a '�normal'� year.'�


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