House prices fell by 0.1% in December, according to Nationwide, taking the average UK property price to £262,068.

This was the fourth consecutive monthly decline in house prices and the worst run since 2008. It left property prices in December 2.5% lower than their August peak, said the building society.

The monthly falls have pulled down annual house price growth to 2.8% in December, from 4.4% in November.

Robert Gardner, Nationwide’s chief economist, said: “While financial market conditions have settled, mortgage rates are taking longer to normalise and activity in the housing market has shown few signs of recovery.

“It will be hard for the market to regain much momentum in the near term as economic headwinds strengthen, with real earnings set to fall further and the labour market widely projected to weaken as the economy shrinks.

“The recent weakness in mortgage applications may, in part, represent an early seasonal slowdown. With the chaotic backdrop and elevated mortgage rates in recent months, it wouldn’t be surprising if potential buyers have opted to wait until the New Year to see how mortgage rates evolve before deciding to step into the market.”

Regional picture

All regions recorded a marked slowdown in annual price growth in the final quarter of the year, said Nationwide.

East Anglia was the strongest performing region in 2022, with average prices increasing by 6.6%, while Scotland was weakest, with growth of just 3.3%.

London remained the weakest performing English region, with annual price growth slowing to 4.1%, from 6.7% in Q3.

The slowdown in the last quarter of the year was most pronounced in the South West, the strongest performing region last quarter, which saw annual house price growth slow from 12.5% to 4.3%.

Wales saw annual growth slow from 12.1% in Q3 to 4.5% in Q4. Northern Ireland saw prices increase by 5.5% during 2022, much weaker than the 12.1% rise recorded in 2021.

England saw a further slowing in annual house price growth to 4.8%, from 9.9% in Q3.

Gardner added: “Recent quarters have seen significant narrowing in the gap between the weakest and strongest performing regions in terms of annual growth, with Q4 2022 seeing the smallest difference – 3.3 percentage points – in the history of our regional indices, which stretch back to 1974.”