Mortgage lender Nationwide revealed that British house prices saw a more substantial decline than anticipated, falling by 1.8 per cent in the 12 months leading up to December. This figure exceeded the expectations of economists, who, according to a Reuters poll, had predicted a drop of 1.4 per cent.
On a month-on-month basis, house prices in December remained flat compared to November. The UK's housing market, which witnessed a robust surge during the COVID-19 pandemic, has faced headwinds due to increased borrowing costs following the Bank of England's efforts to combat elevated inflation.
Despite this decline, recent weeks have seen a decrease in mortgage rates, hinting at a potential stabilisation in the market. Robert Gardner, Chief Economist at Nationwide, commented on the overall weakness in housing market activity throughout 2023.
He noted that total transactions have been running approximately 10 per cent below pre-pandemic levels over the past six months, with mortgage-related transactions experiencing an even steeper decline of about 20 per cent, reflecting the impact of elevated borrowing costs.
Looking ahead, Nationwide anticipates that house prices over the course of 2024 are likely to either show a modest decline or remain broadly flat. The housing market's trajectory will likely be influenced by various factors, including economic conditions, borrowing costs, and broader market sentiment.
