The average price of a house fell in the last month by more than the seasonal average

House prices in the UK dropped by 2.1% between November and December, the biggest fall for four years, according to Rightmove’s monthly index. 

house prices

The online estate agent said this was a “bigger dip than usual at this time of year” and said would-be buyers were waiting to see if the market was “calmer” next year. 

Year-on-year house prices were up 5.6% in December, compared to 6.3% in 2021. The average UK property asking price this month is £359,137, the agent reported.  

The news comes after the Halifax last week reported a drop in prices of 2.3% in November, its biggest month-on-month fall for 14 years.

House prices have been hit by higher mortgage rates, which went up above 6% in October, after the economic turmoil caused by September’s mini-budget. Tim Bannister, Rightmove’s director of property science, said: “Though we would always expect prices to drop in December, as motivated sellers try to capture the attention of a buyer before Christmas with a competitive price, this monthly dip is the largest we’ve seen for four years. 

“Economic headwinds including rapidly rising mortgage costs mean that some would-be buyers may have paused their plans for the foreseeable future.”

He added: “There are signs that some discretionary buyers who are still able to move are using the space between now and the New Year to weigh up their options.”

The number of those enquiring about homes in December was up 4% on the same period in 2019, Rightmove reported. The number of views of homes for sale was up 11% on last year. 

“This indicates that there are many ready-to-go buyers, monitoring and waiting for a calmer market in 2023 after an uncertain last few months of the year,” Bannister said. 

He predicted that while there was usually a jump in home-mover activity in January, in 2023 it was likely to be February before the market started.

Bannister said: “We’d usually see a jump in home-mover activity in January, but it takes a while at the start of the year for any significant price changes to feed through, so we’ll be waiting for a potential bounce back in prices in February, which will be a very important leading indicator for the spring moving season.”

He predicted a drop of 2% in the average asking price next year, though price falls “will be tempered by a few forced sales”. 

Homes may also take longer to sell next year as we could “see a stand-off in the early months of 2023 between some sellers who are in no rush to drop their prices, and those affordability-strapped or hesitant buyers”.