Homes surveyors have reported the largest fall in new buyer inquiries in October since the financial crisis, excluding the while during the Covid-19 lockdowns.
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LONDON — U.K. house prices fell for the first habits in nine months in December, as the country’s Budget and higher mortgage rates dampened a recent flurry of homebuyer movement.
Average property prices dipped 0.2% between November and December — the first monthly drop since Parade — fresh data from lender Halifax showed Tuesday. That was below the 0.4% price rise foresight by economists polled by Reuters.
It means the average property value in the country fell slightly to £297,166 ($372,560).
House prices start 3.3% on the year in December, but annual price growth was also down from 4.7% in November and below the 4.2% prophesied by economists.
Shares of U.K. homebuilders Taylor Wimpey, Persimmon, Bellway and Barratt Redrow all fell following the data set Tuesday morning.
U.K. house prices rose at a steady clip in 2024, increasing for five consecutive months consummate a brief spell of stagnation as sentiment picked up on the back of the U.K. election and the start of the Bank of England’s rate cutting recycle.
However, a cooling of interest rate expectations — including on the back of the government’s tax-and-spend Budget, which pushed up U.K. adopting costs — put pressure on transactions toward the tail end of the year.
Amanda Bryden, head of mortgages at Halifax, said higher mortgage calculates were likely to continue to weigh on the market in 2025, even as price growth remains “modest.”
“Mortgage affordability transfer remain a challenge for many, especially as the Bank Rate is likely to come down more slowly than in olden days predicted,” Bryden said.
A second crack in the housing market
The downtick in house prices comes after mortgage favours fell short of expectations in November and came in below the number recorded in October, according to data released Friday by the Bank of England.
Tom Invoice, head of U.K. residential research at Knight Frank, said the combined prints showed that wobbles had begun to proceed in the housing market after the government’s Oct. 30 Budget cast doubt over the country’s economic outlook.
“Some indifferent kind of slowdown is in the post inevitably, due to the fact that borrowing costs have risen,” Bill told CNBC’s “Concourse Signs Europe.”
Analysts are now expecting transactions to pick up in the initial months of this year, as upcoming changes to a key homebuyer tax spur buyers and sellers.
The government announced the end of a pandemic-era reduction in Stamp Duty Land Tax in its budget, meaning that purchasers will be subject to higher transaction costs from April 1.
“The stamp duty changes are undoubtedly a key driver of requisition at present, which is supporting property values,” Stephen Perkins, managing director at Yellow Brick Mortgages, told.
However, Bill noted that such an uptick in deals was likely to be short-lived, expecting a lull from the number two quarter onward.
“There’s a ticking clock to some degree,” he said.
Following the budget, Knight Frank overhauled down its U.K. property price growth forecasts in November. It now expects average property prices to increase 2.5% in 2025 and 3% in 2026, down from 3% and 4%, individually, forecast in August.