The average UK house price ended last year £26,000 higher than when 2022 started, although the annual pace of growth in property values is slowing.

Property values increased by 9.8% in the 12 months to December 2022, which was weaker than the 10.6% annual growth recorded the previous month.

The average UK house price in December 2022 was £294,000, which was £26,000 higher than 12 months earlier, according to the Office for National Statistics (ONS).

On a month-on-month basis, the average UK house price edged down in December 2022, from £296,000 in November 2022.

Average house prices increased over the 12 months to £315,000 (10.3% annual growth) in England, £222,000 in Wales (10.3%), £187,000 in Scotland (5.7%) and £175,000 in Northern Ireland (10.2%).

Within England’s regions, the East Midlands recorded the highest annual percentage increase in house prices in December, at 12.3%, while London recorded the lowest, at 6.7%.

London’s average house prices remain the most expensive of any region in the UK, with an average price of £543,000 in December 2022.

The report warned that annual percentage changes in house prices have been affected by the stamp duty holiday which ended in 2021, leading to some volatility in the figures.

Mortgage rates jumped last autumn following the mini-budget, amid market turmoil.

Since then, the mortgage market has been settling down, although rises in the Bank of England base rate will put an upward pressure on the cost of borrowing generally.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Back in December, both swaps (which lenders use to price their mortgages) and fixed-rate mortgages were rather higher than they are now, as a result of the fallout of the mini-budget.

“Much of that turmoil has passed through the system, with five-year fixes dropping below 4% as servicing pressures subside and lenders remain keen to generate new business.

“Those buyers who have been sitting on their hands may be encouraged to take the plunge now fixes are looking increasingly palatable.”

Frances McDonald, research analyst at estate agent Savills, said: “The fall in the cost of fixed-rate mortgage debt is likely a reflection of lenders trying to capture a greater share of a smaller mortgage market, but there is also an increasing expectation that inflation has peaked and that Bank base rate is likely to start coming down in 2024.

“But borrowers still face a considerable increase in their mortgage costs, whether new entrants to the market or those coming off a fixed-rate deal, which means we likely haven’t seen the end of house price falls.

“But we do expect them to continue to be more modest in the less mortgage-dependent prime markets.”

Helena Marston, chief executive of Purplebricks, said: “With mortgage rates falling, especially five-year fixed-rate products, buyers have more mortgage options than they did at the back end of 2022.”

Malcolm Webb, technical director at Legal & General Surveying Services, said: “Even with this slight decline in house price growth, affordability remains a key issue across the property market, which makes expert advice more valuable than ever.”

Marc von Grundherr, director of estate agent Benham and Reeves, said: “A combination of economic turbulence, increasing mortgage rates and a squeeze on household finances has been the perfect recipe for a reduction in the rate of house price growth and that’s what we’ve seen since the closing stages of last year.”

Sharon Hewitt, managing director at Beaconsfield-based relocation company Chiltern Relocation, said: “In our daily conversations with estate agents, they are happily reporting a strong start to the year, with higher viewings levels than they expected.

“Our inquiries are from downsizers, clients relocating for job moves and clients moving out of London due to the ongoing working from home trend.”

Nick Leeming, chairman of estate agent Jackson-Stops, said: “Positively for buyers, mortgage availability hit a six-month high in February with more than 4,000 deals available.”