According to the Nationwide house price index, UK house prices fell by 1.8% during 2023, with activity in the property market described as weak throughout the year.

Prices were flat month on month in December, according to Nationwide, with average house prices ending the year at £257,443.

“Housing market activity was weak throughout 2023,” said Nationwide’s chief economist, Robert Gardner.

“Even though house prices are modestly lower and incomes have been rising strongly, at least in cash terms, this hasn’t been enough to offset the impact of higher mortgage rates, which in recent months were still more than three times the record lows prevailing in 2021 in the wake of the pandemic.

“As a result, housing affordability has remained stretched.” He continued: “This shift in view is important, as it has brought down longer-term interest rates, which underpin fixed mortgage rate pricing."

Northern Ireland and Scotland were the only parts of the UK to see prices rise in 2023. East Anglia is the weakest-performing region with prices down 5.2% over the year.

Mr Gardner said: “UK house prices ended 2023 down 1.8% compared with December 2022, leaving them almost 4.5% below the all-time high recorded in late summer 2022. Prices were flat compared with November, after taking account of seasonal effects."

He said: “There have been some encouraging signs for potential buyers recently, with mortgage rates edging down. Investors have become more optimistic that the Bank of England has already raised rates far enough to return inflation to target and will reduce rates in the years ahead.

"This shift in view is important, as it has brought down longer-term interest rates, which underpin fixed mortgage rate pricing.

“Nevertheless, a rapid rebound in activity or house prices in 2024 appears unlikely. While cost-of-living pressures are easing, with the rate of inflation now running below the rate of average wage growth, consumer confidence remains weak and surveyors continue to report subdued levels of new buyer enquiries.

"Inflation is declining, but measures of domestic price pressures remain far too high"

"Moreover, while markets are projecting that the next Bank Rate move will be down, there are still upward risks to interest rates. Inflation is declining, but measures of domestic price pressures remain far too high.

“It appears likely that a combination of solid income growth, together with modestly lower house prices and mortgage rates, will gradually improve affordability over time, with housing market activity remaining fairly subdued in the interim.

"If the economy remains sluggish and mortgage rates moderate only gradually, as we expect, house prices are likely to record another small decline or remain broadly flat (perhaps 0 to -2%) over the course of 2024."