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The average house price in the UK fell for the fourth month in a row in December, as the rising cost of living and higher interest rates hit home.

December prices fell by 1.5% compared to November, meaning the average house price is now £281,272, said Halifax.

The bank said uncertainty about how the cost of living will impact household bills, as well as rising interest rates, is slowing the housing market.

It expects buyers and sellers to “remain cautious” over the coming year.

December’s monthly fall was lower than the decline of 2.4% seen in November, even taking into account the expected seasonal slowdown, said Halifax mortgages director Kim Kinnaird.

On an annual basis house prices grew by 2% compared with December 2021 – the slowest rise since October 2019 when prices increased by 1.1%.

It was also sharply lower than the 4.6% annual increase seen in November.

Ms Kinnaird said: “As we enter 2023, the housing market will continue to be impacted by the wider economic environment 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.”

However, she said, the cost of the average home remained high, and even if prices did drop by 8% that would mean the cost of the average property returning to April 2021 prices, still “significantly above” pre-Covid levels.

Martin Beck, chief economic advisor to the EY Item Club forecasting group said the four months of falling prices was the “weakest run since 2008, when the impact of the global financial crisis was building”.

Property prices were likely to continue falling for the “foreseeable future”, he said, declining by about 10% over the next 12-18 months.

Source: BBC

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