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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 enlargement, together with a 4.7 per cent rise throughout November. Costs had been nonetheless 3.3 per cent larger than in December 2023.
The figures disillusioned 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 concentrate on northern areas that may generate short-term variations. Nevertheless, each Nationwide and Halifax present house prices surging through 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 stage since August in November.
The Halifax information means that “current rises in mortgage charges might have began to weigh on the housing market on the finish of final yr 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. Nevertheless, mortgage prices stay properly under their peak reached in summer season 2023.
Webb expects mortgage charges to fall to 4 per cent — additional than most anticipate. This is able to push home worth progress to a wholesome 3.5 per cent in 2025, larger than the consensus forecast of two.5-3 per cent.
Amanda Bryden, head of mortgages at Halifax, mentioned: “Within the latter half of the yr, home costs grew in response to the falls in mortgage charges, alongside revenue progress, each resulting in monetary pressures considerably easing for patrons.”
She added: “Offering employment situations don’t deteriorate markedly from a newer softening, purchaser demand ought to maintain up comparatively properly and, taking all this under consideration, we’re persevering with to anticipate modest home worth progress this yr.”
Stephen Perkins, managing director on the dealer Yellow Brick Mortgages, mentioned: “In our expertise, demand is strong general and the property market exhibits no indicators of abating, at the very least while there may be nonetheless hope to finish earlier than the stamp responsibility adjustments.”
Chancellor Rachel Reeves confirmed within the Funds {that a} short-term stamp responsibility vacation would finish in March. From April, first-time patrons will begin paying the levy for properties price £300,000 or extra, as a substitute of the present £425,000.
Perkins added: “The stamp responsibility adjustments are undoubtedly a key driver of demand at current, which is supporting property values.”
