Two of Britain’s largest predict that residential property prices will continue to fall next year, albeit only modestly.

With the economy struggling and mortgage rates much higher than they were, Nationwide  estimate that property prices will decline 2%, while Halifax projects that they will drop by between 2% and 4% in 2024, owing in part to the ongoing supply-demand imbalance in the market.

Kim Kinnaird, director of Halifax Mortgages, commented: “Economic growth is expected to remain weak, with unemployment rising and frozen tax thresholds limiting any increase in take-home earnings.

“Overall, with the combination of cost of living pressures and interest rate levels that are still much higher than even two years ago, we will be likely to see continued mild downward pressure on house prices.”

Although the indications are that the Bank of England rate hikes are at or near their peak, Robert Gardner, chief economist at Nationwide, says the housing market will remain weak in the near-term.

While cost of living pressures are easing, with the rate of inflation now running below the rate of average wage growth, consumer confidence remains weak and surveyors continue to report subdued levels of new buyer inquiries,” he said.

“Moreover, while markets are projecting that the next Bank rate move will be down, there are still upward risks to interest rates. Inflation is declining but measures of domestic price pressures remain far too high,” he added.

The Office for Budget Responsibility is more pessimistic, forecasting a 4.7% decline next year, and it estimates that property prices will not return to their autumn 2022 peak until the end of 2027.