December’s figures showed that prices remained the same as the previous month, with an average property price in the UK of £257,443.
Robert Gardner, Nationwide’s chief economist, said: “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. A borrower earning the average UK income and buying a typical first-time buyer property with a 20pc deposit would have a monthly mortgage payment equivalent to 38pc of take-home pay – well above the long run average of 30pc.”
Furthermore, Gardener says, while the outlook is brighter for the years ahead with the Bank of England expected to start reducing its Bank Rate, “a rapid rebound in activity or house prices in 2024 appears unlikely”.
There are still risks that inflation will rebound, forcing interest rates to go back up as other domestic price pressures with the cost of living continuing to dampen demand.
The Bank of England decided to hold interest rates at 5.25pc in August and this month after 14 consecutive rises since December 2021.
Other lenders have made similar forecasts about the outlook for house prices in 2024.
