In December, UK house prices marked a third consecutive monthly increase, rising by 1.1%, according to Halifax, the country’s largest mortgage lender. This follows a 0.6% uptick in November and a 1.2% surge in October, bringing the average home value to £287,105, approximately £3,000 higher than November. The growth, however, is attributed more to a scarcity of available properties than to strong buyer demand.

Halifax, which recently participated in a new year rate-cutting initiative, suggests that despite the shortage-driven growth, mortgage rate reductions may instill confidence in buyers in the coming months. This is the first time in eight months that Halifax reported annual growth in the UK housing market, with a 1.7% year-on-year increase in December.

Kim Kinnaird, Director of Halifax Mortgages, mentioned that the positive trend in December could be seen as a “Christmas miracle” given the challenges of the turbulent year. Despite rising mortgage approvals, Goldman Sachs estimates a £19 billion increase in mortgage costs for UK homeowners by the end of the next year, posing additional strain on household finances as fixed-rate deals expire.

Halifax anticipates a decline in house prices of up to 4% in the current year due to high interest rates and inflation affecting mortgage affordability. The lender predicts a 2% to 4% decrease in the average UK property value, even amid a mortgage rate-cutting spree by major lenders at the beginning of the year.

As the UK property market navigates wider uncertainties in 2024, buyers and sellers are expected to approach transactions cautiously. Despite wage growth surpassing inflation, housing affordability remains a concern due to sustained high interest rates, according to Kinnaird.

Halifax noted that the south-east of England experiences the most downward pressure on house prices, with a 4.5% average drop over the last year. London, despite maintaining the highest average house price at £528,798, saw a 2.3% annual decline. In contrast, Northern Ireland emerged as the strongest-performing region, with a 4.1% annual increase, bringing the average property cost to £192,153.

Jonathan Hopper, CEO of Garrington Property Finders, emphasized a cautious optimism in the property market, with signs of stabilization and increasing numbers of strategic buyers resuming paused plans amid the changing landscape.