Its new house price index revealed values had fallen by 1.5% in December meaning the average UK property now has a price tag of £281,272 – down from £285,425 in November.
Annual growth had slowed from 4.6% in November to 2% in December as a consequence of the cost-of-living crisis and the continued uncertainty it has been creating.
And Kim Kinnaird, director, Halifax Mortgages, said the downward trend was set to continue. “As we enter 2023, the housing market will continue to be impacted by the wider economic environment,” she said.
“And, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall, with house prices forecast to fall around -8% over the course of the year.
“It’s important to recognise that a drop of 8% would mean the cost of the average property returning to April 2021 prices, which still remains significantly above pre-pandemic levels.”
It comes just days after Nationwide, which publishes another major house price index, forecast a 5% drop in house prices in 2023.
What’s more, this week it emerged mortgage approvals in November had fallen by 20.4%. Although this happened two months ago, these figures provide an indicator of future borrowing.
Alice Haine, personal finance analyst at BestInvest explained: “This was a further sign of dampening demand in the face of rising interest rates, double-digit inflation, the highest tax burden since the Second World War and the threat of job losses if the expected recession hits hard.
“But the economy might also experience a softer landing if some of the cost-of-living pressures continue to ease, such as falling energy prices, and unemployment does not rise substantially.”
She said those looking to take on a new mortgage or to refinance should consider their options carefully in 2023.
She added: “A good independent mortgage broker can offer guidance for first-time buyers and those looking to remortgage on the best solution for their situation, such as whether a variable or fixed-rate mortgage works best.”
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