British house prices slid in December, capping the largest quarterly drop since the financial crisis more than 10 years ago, data from mortgage lender Halifax showed on Friday.

The average house price fell by 1.5 per cent month-on-month in December, following a 2.4 per cent fall in November and marking the fourth consecutive monthly decline, Halifax said.

In quarterly terms, house prices fell 2.5 per cent - the biggest drop since the three months to February 2009.

Other gauges of the housing market have also shown a sharp slowdown in the housing market, reflecting rising interest rates and a worsening economy as households suffer increases in the cost of living.

Bank of England data on Wednesday showed lenders approved far fewer mortgages than expected in November.

Bond market turmoil triggered by former prime minister Liz Truss’s short-lived tax-cut plans also caused many lenders to withdraw mortgage offers in October.

“Property prices are likely to continue falling for the foreseeable future,” said economist Martin Beck from the EY ITEM Club consultancy, which expects house prices to fall around 10 per cent over the next 12-to-18 months.

Halifax expects house prices to drop 8 per cent in 2023 - although it said this would only mean a return to levels last seen in April 2021.

House prices surged shortly after the COVID-19 pandemic took hold as temporary tax incentives drove a rush to buy bigger homes with gardens.