Housing surveyors reported the biggest drop in new buyer inquiries in October since the financial crisis, barring a period of coronavirus lockdowns.
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LONDON – UK house prices fell for the first time in nine months in December, as the country's budget and rising mortgage rates dampened a recent wave of home buying activity.
Average property prices fell 0.2% between November and December – the first monthly decline since March – new data from Halifax Bank showed on Tuesday. This is lower than the expectations of economists polled by Reuters for a 0.4 percent rise in prices.
This means that the average property value in the country fell slightly to £297,166 ($372,560).
Home prices rose 3.3% year over year in December, but annual price growth was also down from 4.7% in November and below the 4.2% that economists had expected.
Shares of house building companies in the United Kingdom Taylor Wimpey, Persimmon, The bell and Redro Bars They all fell after the data was released on Tuesday morning.
UK house prices rose at a steady rate in 2024, rising for five straight months after a short period of recession as sentiment improved on the back of the UK election and the start of the Bank of England. Rate reduction cycle.
However, A Cooling interest rate forecasts – Including against the background of the government Tax and spending budgetwhich led to higher borrowing costs in the UK – putting pressure on transactions towards the end of the year.
High mortgage rates are likely to continue to impact the market in 2025, even as price growth remains “modest,” said Amanda Bryden, head of Halifax Mortgage.
“Mortgage affordability will remain a challenge for many, especially as the bank rate is likely to fall more slowly than previously expected,” Bryden said.
Second crack in the housing market
The decline in house prices comes after mortgage approvals fell short of expectations in November and were below the number recorded in October, according to data released on Friday by the Bank of England.
Tom Bell, head of UK housing research at Knight Frank, said the data collected showed that fluctuations were beginning to emerge in the housing market after the government's October 30 budget cast doubt on the country's budget. Economic forecasts.
“There is inevitably some kind of slowdown ahead, due to higher borrowing costs,” Bell told CNBC's “Street Signs Europe.”
Analysts now expect transactions to rise in the first months of this year, as upcoming changes to the major home buyer tax incentivize buyers and sellers.
The Government announced the end of the pandemic-era cut in stamp duty land tax in its Budget, meaning buyers will be subject to higher transaction costs from 1 April.
Stephen Perkins, managing director at Yellow Brick Mortgages, said: “Changes in stamp duty are undoubtedly a key driver of demand at present, which is supporting property values.”
However, Bell noted that such a surge in deals was likely to be short-lived, predicting a lull from the second quarter onwards.
“There's a bit of a ticking clock,” he said.
Following the budget, Knight Frank cut its forecast for UK property price growth in November. It now expects average property prices to rise 2.5% in 2025 and 3% in 2026, down from 3% and 4%, respectively, in the August forecast.
