House prices unexpectedly fell for a fourth successive month at year-end. A monthly 1.5 percent decline was well wide of the market consensus and following a marginally steeper revised 2.4 percent drop in November, cut annual inflation from 4.6 percent to 2.0 percent, more than 10 percentage points short of the recent peak seen in June.

The quarterly change, the best guide to underlying developments, now stands at minus 2.5 percent, down from minus 1.1 percent in the three months to November and its sixth straight fall. All regions experienced weaker annual inflation versus November with the London rate sliding from 5.0 percent to 2.9 percent. Even so, average prices are still fully 11.0 percent higher than at the start of 2022. This year is expected to see a combination of weaker demand and supply which the Halifax believes will cause prices to fall around 8 percent.

Today's update puts the UK ECDI at 10 and the ECDI-P at just 4. Overall UK economic activity is performing broadly in line with market expectations.

House prices are seen flat following a hefty 2.3 percent monthly fall in November.

The Halifax House Price Index (HPI) is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and the basic methodology remain unchanged. However, in May 2020, the annual growth measure was changed from the average of the last three months to just the latest month.

Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.