Even though the outlook for prices remains negative, market conditions appear to have stabilized following the mini-budget upheaval that dramatically impacted prices in October.

According to a widely followed metric, house prices experienced their “worst run” since 2008 with a fourth straight monthly decrease in December.

In December, the annual rate of price increase slowed significantly to 2.8% from 4.4% in November, as measured by the index of mortgage lender Nationwide.

It was reported that prices decreased by 0.1% between November and December.

The loss was significantly less than the 0.7% drop predicted by a Reuters poll of economists.

In the wake of September’s mini-budget crisis, when borrowing costs skyrocketed and many mortgage lenders, including Nationwide, briefly suspended lending, this signified the return of a degree of stability.

Simultaneously, the Bank of England has lifted its rate to combat energy-driven inflation, which is still at a 40-year high, through a series of hikes that have increased mortgage payments for those on the tracker and standard variable rates.

“While financial market conditions have stabilized, it is taking longer for mortgage rates to normalize, and the housing market shows little indications of recovery,” said Nationwide’s chief economist, Robert Gardner.

“Since economic headwinds grow, it will be difficult for the market to regain significant pace shortly, as real incomes are predicted to decline further and the labor market is widely anticipated to weaken as the economy contracts.

The recent decline in mortgage application volume may be attributable, in part, to an early seasonal slowdown.

With the volatile environment and rising mortgage rates in recent months, it would not be unusual if prospective purchasers have chosen to wait until the New Year to enter the market to observe how mortgage rates develop.

“Longer-term interest rates, which are the basis for mortgage pricing, have reverted to levels prevalent before the mini-budget.

If sustained, this should flow through to mortgage rates and assist improve affordability for potential purchasers, as well as robust wage growth (now running at a 7% pace in the private sector), especially if combined with weak or negative house price growth.