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UK house prices rise again but Halifax forecasts up to 4% drop in 2024

According to Halifax, UK house prices rose for a third consecutive month in December amid a shortage of properties but are forecast to drop this year.

Britain’s biggest mortgage lender, which joined in new year rate cutting this week, said that property prices grew by 1.1% in December, after a 0.6% rise in November and a 1.2% increase in October. A typical home in the UK is now worth £287,105, about £3,000 more than in November.

However, Halifax said that the monthly, quarterly and annual growth rates were driven by a shortage of properties on the market rather than strong buyer demand.

“That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months,” said Kim Kinnaird, the director of Halifax Mortgages.

It is the first time in eight months that Halifax has reported annual growth in the UK housing market, with prices up by 1.7% year on year in December.

“A clean sweep of positive house price growth in December could be considered somewhat of a Christmas miracle given the turbulent year 2023 turned out to be,” said Marc von Grundherr, a director of the London estate agency Benham and Reeves.

Figures released by the Bank of England on Thursday showed that mortgage approvals for house purchases rose to 50,100 in November from 47,900 in October, pointing to a strengthening of demand.

However, analysts at Goldman Sachs have estimated that UK homeowners will face a £19bn increase in mortgage costs by the end of next year as millions more fixed-rate deals expire, putting additional strain on household finances.

Halifax expects house prices to fall by up to 4% this year as high interest rates and inflation stretch mortgage affordability.

The lender said that the price of an average UK property would fall between 2% and 4% this year despite major lenders’ new year mortgage rate-cutting spree.

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