Agents have spent the weekend insisting that the latest house price fall is not indicative of a crash – and may just be the continuing fall out from the catastrophic September mini-Budget.

The average house price fell a further 1.5 per cent in December according to the Halifax – and that comes on top of a 2.4 per cent fall in November. The annual rate of growth – including almost a year ago when house prices were rising rapidly – now stands at a meagre 2.0 per cent after four straight months of price falls.

The typical UK property now costs £281,272 – down from £285,425 last month – with the rate of annual growth slowing in each of the nations and regions of the UK.  

Iain McKenzie, chief executive of the Guild of Property Professionals, says: “There’s no need to panic, as a readjustment in the market was to be expected following more than two years of inflated house prices. Pessimism over the future of house prices may be misplaced. Employment figures remain strong, and there are signs we may soon see falls in the wholesale fuel prices, which have helped drive up inflation and the cost of living over the past year. 

“The effects of the cost-of-living crisis will continue to determine house prices in 2023, as prospective buyers take mortgage affordability into account before signing on the dotted line. Inflation must be brought under control in order to restore confidence in the property market.”

Tom Bill, head of UK residential research at Knight Frank, adds: “The first rule for anyone predicting the trajectory of house prices in 2023 should be to ignore any data from the chaotic final quarter of 2022. The latest data shows two things are happening at the same time. 

“First, the effect of the mini-Budget is working its way through the system, which means that monthly declines are narrowing. At the same time, an annual fall in house prices appears imminent, underlining how the lending landscape has changed irrespective of the mini-Budget. As rates normalise, buyers will increasingly recalculate their financial position and house prices will come under pressure. We expect a 10 per cent decline over the next two years.”

Jeremy Leaf, the north London estate agent and a former RICS residential chairman, comments: “Housing market activity dropped and sales are taking longer as buyers reclaim the balance of power due principally to the cost of living and interest rate rises. Prices may soften further before mortgage costs fall despite recent modest reductions as concerns about job security increase. 

“Lack of supply means prices are unlikely to fall sharply as we have found many buyers waiting until early 2023 to see if mortgage rates settle before deciding to move.”

And Jason Tebb, chief executive officer of OnTheMarket, states: “Seasonal factors are increasingly evident after two years in which the pandemic has skewed the usual norms one would expect to see in the market. Our own data shows that sellers expect it to take longer to sell their homes than has been the case in recent months, which ties in with this, although confidence remains remarkably stable.

“As we head into a new year, conditions remain challenging as the cost of living and mortgage rates remain higher than many have become used to. However, people will need to move regardless, with sellers wise to price realistically in order to achieve a successful and timely outcome.”