Data published by Nationwide Building Society showed that housing prices remained unchanged in December after increasing by 0.2% in November. Economists had expected prices to rise by 0.1%. In annual terms, house prices fell by 1.8%, slowing compared to November (-2.0%). It marks the lowest decline in house prices since February. Consensus estimates suggested a 1.4% drop. As a result, the average price of a typical home (not seasonally adjusted) was 257,443 pounds compared to 258,557 pounds in November. Nationwide said that prices are now 4.5% below the all-time high recorded in late summer 2022.
“Housing market activity was weak throughout 2023. The total number of transactions has been running at 10% below pre-pandemic levels over the past six months, with those involving a mortgage down even more (c20%), reflecting the impact of higher borrowing costs. On the flip side, the volume of cash transactions has continued to run above pre-Covid levels. Even though house prices are modestly lower and incomes have been rising strongly, at least in cash terms, this hasn’t been enough to offset the impact of higher mortgage rates. But there have been some encouraging signs for potential buyers recently, with mortgage rates edging down. It appears likely that a combination of solid income growth, together with modestly lower house prices and mortgage rates, will gradually improve affordability over time, with housing market activity remaining fairly subdued in the interim. If the economy remains sluggish and mortgage rates moderate only gradually, as we expect, house prices are likely to record another small decline or remain broadly flat (perhaps 0 to -2%) over the course of 2024," said Robert Gardner, Nationwide's Chief Economist.