UK house price growth eases in December - ONS

Average UK house price growth eased in the year to December 2022, according to figures released on Wednesday by the Official for National Statistics.

House prices were up 9.8%, down from 10.6% growth in November, with the average price standing at £294,000. Analysts had been expecting growth of 11.2%.

On the month, prices were down 0.4% following a 0.2% increase in November.

House prices in England and in Wales rose 10.3%, while prices in Scotland and Northern Ireland were up 5.7% and 10.2%, respectively.

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

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: "The whack to buyer affordability over the past few months from higher mortgage rates started to weigh more heavily on house prices in December.

"We think house prices will continue to decline over the next six months or so, resulting in a peak-to-trough fall of about 8%. Admittedly, mortgage rates are coming back down from October’s peaks, but they still look set to remain around two and a half times higher than they were at the start of 2022, meaning someone having to refinance will see the share of their incomes absorbed by repayments jump to around 28%, from 21%.

"And a greater number of potential buyers will fail affordability tests, given that they have become harder to pass since Bank Rate has risen. At the same time, real disposable incomes look set to be hit again in Q2 by the withdrawal of government support for energy bills."

Barret Kupelian, senior economist at PwC, said: "Judging from other recently released indicators of house prices, we expect prices to continue to contract in the short-term. However, some of this effect will be moderated by the strong wage growth, which is a key driver of activity in the market."