UK home costs fell again barely in December, undershooting economists’ expectations and marking the primary contraction since March, based on the lender Halifax.
The common property worth decreased 0.2 per cent between November and December to £297,166, new information confirmed on Tuesday. The contraction follows 5 months of growth, together with a 4.7 per cent rise throughout November. Costs have been nonetheless 3.3 per cent increased than in December 2023.
The figures upset economists’ expectations of month-to-month progress of 0.4 per cent and an annual rise of 4.2 per cent.
The numbers are at odds with separate information by the lender Nationwide, which reported a 0.7 per cent month-on-month improve in December, and point out the quickest annual tempo since October 2022.
Halifax has a bigger pattern than Nationwide, with about 15,000 transactions in contrast with 12,000, and a deal with northern areas that may generate short-term variations. Nonetheless, each Nationwide and Halifax present house prices surging in the course of the pandemic, contracting as mortgage charges rose over the previous two years and recovering in 2024.
Separate information by the Financial institution of England confirmed final week that mortgage approvals fell to the bottom degree since August in November.
The Halifax information means that “latest rises in mortgage charges might have began to weigh on the housing market on the finish of final 12 months a bit greater than beforehand thought,” mentioned Ashley Webb, economist on the consultancy Capital Economics.
Mortgage charges ticked up in November, as markets forecast that the BoE will decrease borrowing prices extra slowly than beforehand anticipated. Nonetheless, mortgage prices stay effectively under their peak reached in summer season 2023.
Webb expects mortgage charges to fall to 4 per cent — additional than most anticipate. This may push home worth progress to a wholesome 3.5 per cent in 2025, increased than the consensus forecast of two.5-3 per cent.
Amanda Bryden, head of mortgages at Halifax, mentioned: “Within the latter half of the 12 months, home costs grew in response to the falls in mortgage charges, alongside earnings progress, each resulting in monetary pressures considerably easing for patrons.”
She added: “Offering employment circumstances don’t deteriorate markedly from a more moderen softening, purchaser demand ought to maintain up comparatively effectively and, taking all this under consideration, we’re persevering with to anticipate modest home worth progress this 12 months.”
Stephen Perkins, managing director on the dealer Yellow Brick Mortgages, mentioned: “In our expertise, demand is strong general and the property market reveals no indicators of abating, at the least while there’s nonetheless hope to finish earlier than the stamp obligation modifications.”
Chancellor Rachel Reeves confirmed within the Price range {that a} short-term stamp obligation vacation would finish in March. From April, first-time patrons will begin paying the levy for properties value £300,000 or extra, as a substitute of the present £425,000.
Perkins added: “The stamp obligation modifications are undoubtedly a key driver of demand at current, which is supporting property values.”
