LONDON (Reuters) -British house prices rose in annual terms in December for the first time in eight months, data from mortgage lender Halifax showed on Friday, adding to signs of a stabilisation in the property market after a hit from higher borrowing costs.
House prices were 1.7% higher than in December 2022 - when the market was hammered by the "mini-budget" crisis of former Prime Minister Liz Truss.
In monthly terms, prices rose by 1.1% from November, Halifax said.
Britain's housing market boomed during the COVID-19 pandemic before demand fell as the Bank of England pushed up interest rates to counter a surge in inflation across the economy.
However, a fall in mortgage rates in recent weeks has prompted some buyers to return to the market.
BoE data published on Thursday showed lenders approved the most mortgages in November since June.
Kim Kinnaird, director at Halifax Mortgages, said December's price rise was probably driven mostly by a lack of properties on for sale but the fall in mortgage rates raised the possibility of increased confidence among buyers in early 2024.
"Our latest forecast suggests house prices could fall between -2% and -4% during the coming year, although, as with recent years, forecast uncertainty remains high given the current economic climate," Kinnaird said.
Imogen Pattison, an economist with Capital Economics, said the full-year increase in prices was helped by a 1.4% monthly fall in December 2022, shortly after the mini-budget crisis hit bond markets and market interest rates soared.
However, the recent fall in mortgage rates meant Capital now expected British house prices to rise by an annual 3% in the fourth quarter of 2024, compared with a previous forecast of a 1.5% fall, Pattison said.
Last week, rival mortgage lender Nationwide - which uses a different methodology to Halifax - said its data showed a fall of 1.8% in house prices in the 12 months to December, the biggest drop over the course of a year since 2008.