UK house prices finished 2023 little changed from a year ago, defying predictions for a sharp downturn, figures from one of the biggest mortgage lenders indicated.

Nationwide Building Society said its measure of property prices fell 1.8 per cent from a year ago in December to £257,443 (S$432,821), slightly higher than the 1.3 per cent drop economists forecast last week but much less than the 10 per cent drop most had expected a year ago.

A shortage of properties on the market along with robust demand helped the market hold up better than most forecasters had predicted.

Prices strengthened in each of the past four months as mortgage costs eased, reflecting expectations the Bank of England will start lowering its key lending rate next year.

“Housing market activity was weak throughout 2023,” said Robert Gardner, Nationwide’s chief economist. “The total number of transactions has been running at 10 per cent below pre-pandemic levels over the past six months, with those involving a mortgage down even more.”

Prices were unchanged in the month of December after a 0.2 per cent gain the month before.

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Economists had expected a 0.1 per cent increase in the month, which would have been the fourth consecutive rise.

Prices have now fallen almost 4.5 per cent below their peak in late summer 2022, Nationwide said. BLOOMBERG