House prices rose for third straight month in December

House prices dropped

It was the third monthly gain after six successive declines before that

Average UK house prices rose for the third successive month in December to their highest level since March 2023 as lower mortgage rates fuelled a revival in the property market.

The cost of an average home increased by 1.1% to £287,105, just over £3,000 more than in November and the highest level since March, Halifax said.

It was the third monthly gain after six successive declines before that.

Property values rose by 1.7% on average across 2023, ending the year £4,800 higher than it had been at the end of 2022.

Kim Kinnaird, director at Halifax Mortgages, said: The growth we have seen is likely being driven by a shortage of properties on the market, rather than buyer demand.

That said, with mortgage rates continuing to drop, we may see a rise in confidence from buyers over the coming months, Kinnaird added.

The average rate on a two-year fixed mortgage has dropped to its lowest level for nearly seven months. Financial information service Moneyfacts said the average rate had dropped from 5.92% to 5.87%.

The rebound in house prices over the last three months comes as buyer confidence improves ahead of expected reductions to interest rates this year, as per mortgage brokers.

Sofia Jones, MD at broker Penny House, said: 2023 was the most challenging year for borrowers that I have seen, with interest rates soaring quickly.

November and, to a greater extent December, saw confidence bounce back sharply as mortgage rates came down in earnest, she added.

Despite the rise, Halifax forecasts house prices to drop by between 2% and 4% in 2024 as mortgage rates remain historically high.

Across all the UK regions, Northern Ireland recorded the strongest house price growth in 2023, as properties rose by 4.1% to £192,153.

Scotland saw property prices rise by 2.6% to £205,170. At the other end of the scale, the South East dropped most sharply, houses there now average £376,804, a decline of £17,755, or 4.5%.

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