UK house prices climbed for the third straight month in December, Halifax said, capping off a resilient year for the property market in the face of painfully high mortgage rates.

The mortgage provider said that the average house price rose to £287,105 last month, a 1.1% increase from November. 

It meant that prices were up 1.7% in 2023 as a whole despite Halifax’s much gloomier prediction of an 8% correction.

“The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand,” said Kim Kinnaird, director at Halifax Mortgages. “That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.”

A number of lenders have rushed to slash mortgage rates in recent days. The price war comes after investors ramped up their bets on the Bank of England slashing interest rates this year. Currently markets are leaning toward the first cut coming in May followed by at least four more by the end of the year.  

A cooling in mortgage rates from the 15-year high hit last summer is tempting more buyers back to the market, helping to prop up prices. According to Moneyfacts, the average two-year fixed mortgage rate has fallen to 5.87%, well below the almost 6.9% peak seen in July. BOE data Thursday showed mortgage approvals jumping more than forecast in November.

While some experts expect house prices to stabilise in 2024, Halifax is maintaining its more pessimistic view of Britain’s property market, predicting a 2% to 4% decline in valuations.

  - Bloomberg