PRO Business MS

Accounting and Finance

Average UK house price falls for fourth month in a row

The average UK house price fell for the fourth month in a row in December, according to Halifax, with experts expecting a further slowdown amid a long recession.

Property values decreased by 1.5% in December, the lender’s monthly index revealed, after a 2.4% drop in November, a 0.4% decrease in October and a 0.1% dip in September.

 

The annual rate of house price growth more than halved, to 2% in December, from 4.6% in November. That marked the lowest annual growth rate recorded since October 2019, when a 1.1% increase was recorded.

 
Woodleys, a Grade II listed Georgian country house, was recently sold for the first time in 141 years.
Sales of ‘super-prime country houses’ outside London hit a 15-year high
Read more

The UK housing market has been through a volatile period in recent months. The Bank of England has raised interest rates nine times in the past year, and it believes that the country has already entered what could be the longest recession in 100 years. Mortgage payers forced to refinance their loans are among the worst hit by the cost of living crisis after many found their annual bills increasing by more than £3,000 a year.

Across the UK the average house price in December was £281,272, Halifax said. That was 4.3% below the record high of nearly £294,000 in August, although still above the price at the start of 2022.

Higher interest rates have also deterred housebuilders from embarking on new projects, according to data published on Friday that shows the construction sector contracted in December.

Orders for new homes slumped while plans for civil engineering projects and commercial office building were also put on hold, according to the latest S&P Global/CIPS construction purchasing managers index, which fell from 50.4 in November to 48.8 in December. A figure below 50 indicates activity in the sector shrank.

 

Martin Beck, the chief economic adviser to the EY Item Club, said: “With a slowdown in the housing market and an expected outright [annual] fall in house prices, it’s likely the appetite for new home construction has deteriorated.”

The difficulties for housesellers in 2022 were compounded by the UK government, whose disastrous “mini-budget” under then prime minister Liz Truss and her chancellor Kwasi Kwarteng in September triggered a surge in mortgage rates.

A policy reversal by their successors eventually restored some calm to the market, and lenders this week responded to falling demand for mortgages by cutting mortgage rates. TSB will cut rates on five-year fixed rate mortgages for buyers by up to a percentage point from Monday. The rate for a five-year fixed rate mortgage when borrowing 85% of the property value will fall to 5.49%.

Nationwide, the UK’s largest building society, will cut up to 0.6 percentage points from its mortgage rates on Friday. The rate for a five-year fixed rate mortgage when borrowing 85% of the property value dropped to 4.84%.

Andrew Wishart, senior property economist at Capital Economics, a consultancy, said the Halifax price data suggested that “the house price correction is further advanced than we previously thought”.