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 value 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 upset economists’ expectations of month-to-month development 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 enhance 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. 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 could 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 effectively beneath 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 value development 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 development, each resulting in monetary pressures considerably easing for consumers.”
She added: “Offering employment circumstances don’t deteriorate markedly from a newer softening, purchaser demand ought to maintain up comparatively effectively and, taking all this under consideration, we’re persevering with to anticipate modest home value development this yr.”
Stephen Perkins, managing director on the dealer Yellow Brick Mortgages, mentioned: “In our expertise, demand is powerful total and the property market reveals no indicators of abating, at the very least while there’s nonetheless hope to finish earlier than the stamp responsibility adjustments.”
Chancellor Rachel Reeves confirmed within the Finances {that a} momentary stamp responsibility vacation would finish in March. From April, first-time consumers will begin paying the levy for properties price £300,000 or extra, as an alternative 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.”
