Average UK house price rises to £294,000 as market cools

House prices increased at a slower rate in December, with the average UK property price standing at £294,000.

House prices increased by 9.8% annually in December, slowing from 10.6% annual growth in November, according to the Office for National Statistics (ONS).

The average UK house price was £294,000 in December. This was £26,000 higher than a year prior, but a slight decrease from November's record high of £296,000.

“Annual house price inflation, measured using final transaction prices, slowed again in December across the majority of the nations and regions," said ONS assistant deputy director of prices, Chris Jenkins.

From a regional perspective, East Midlands showed the highest annual growth, while Scotland remains the slowest growing part of the UK.

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Average house prices increased over the 12 months to £315,000 (10.3% annual growth) in England, £222,000 in Wales (10.3%), £187,000 in Scotland (5.7%) and £175,000 in Northern Ireland (10.2%).

London saw the weakest annual price rise of all English regions with prices in the capital up 6.7%. However, average house prices remained the most expensive of any region in the UK, with an average price of £543,000.

Looking solely at England, The North East continued to have the lowest average house price of all English regions, at £164,000 in December.

Rising interest rates and higher mortgage borrowing costs, combined with the cost of living crisis and the economic outlook, all appear to have started to cool the market.

Marc von Grundherr, director of Benham and Reeves, said: “A combination of economic turbulence, increasing mortgage rates and a squeeze on household finances has been the perfect recipe for a reduction in the rate of house price growth and that’s what we’ve seen since the closing stages of last year.

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"When you also couple these factors with the usual seasonal slowdown that hits the market during December, it would have been more of a surprise had house prices continued to climb.

"However, what’s important to note is that the rate of decline has been far more marginal than many predicted and this should stand the property market in very good stead for the year ahead.”

House price growth has only slowed modestly, according to Myron Jobson, senior personal finance analyst at Interactive Investor.

“Growth is still high – remaining in double digits in some regions. But house prices aren’t the only key determinant for home buyers and sellers. Personal circumstances might require you to buy a home,” he said.

“But if you can’t make the numbers work, rather than stretching too much now, it might be more financially prudent to wait until you are a bit more comfortable financially to buy.”

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