The average price of houses for sale in Britain fell by 2.1 per cent in December from November, the fastest rate of decrease in four years.
According to data from the property website Rightmove, the average asking price dropped by £7,862 in December to £359,137, an acceleration from the 1.1 per cent decline in November.
While asking prices traditionally take a dip in December, as sellers look to complete deals before Christmas, the latest figures are a bigger dip than usual at this time of year as some determined sellers try to tempt hesitant buyers, Rightmove said.
The Rightmove data adds to a picture of a downturn in the housing market, following surveys from the UK's two largest mortgage lenders and the Office for National Statistics (ONS).
Higher interest rates, inflation and the cost-of-living crisis are giving potential house buyers second thoughts.
Next year, Rightmove predicts a 2 per cent fall in house prices, the downside being an increase in people looking to buy. The company said there had been an 11 per cent rise in visits to its website this year.
“Some buyers are distracted, not only by the festive season, but also by the thought that they may get a better fixed-rate mortgage deal and a more stable outlook by waiting until the new year,” said Tim Bannister, Rightmove’s director of property science.
“Our data suggests that there are many ready-to-go movers out there waiting for what they feel to be the right time to enter the market in 2023.”
The December numbers mean that house prices were up 5.6 per cent over the year, compared with a rise of 6.3 per cent in 2021.
The Bank of England raised interest rates eight times this year, with its key rate hitting 3.5 per cent last week. Lending rates on mortgages shot up to above 6 per cent in the wake of the Truss government's disastrous mini budget in late September, and have not fallen far back from those levels, even though financial conditions have since stabilised.
“We expect that lower numbers of new buyers since the mini-budget will translate to lower transaction numbers. We have not seen huge numbers of properties come to the market, so we expect restricted supply to continue”, said Guy Gittins, chief executive of the property agent Foxtons.
Meanwhile, the trade body representing the banking and finance industries in the UK, UK Finance, said that banks and building societies will lend 23 per cent less to home buyers in 2023, taking the volume of mortgages back to levels seen before the Covid-19 pandemic.
It forecast on Monday that gross mortgage lending for house purchases would fall to £131 billion ($159 billion) in 2023 from £171 billion this year and a peak of £189 billion in 2021, when pandemic-related tax incentives were in force.
Lending to landlords who look to buy properties to rent out was forecast to fall by 27 per cent, and overall residential property sales on a unit basis are likely to drop to 1.01 million next year from 1.27 million in 2022, it added.
“Amid challenging times for the UK economy, we expect cost-of-living pressures and rising interest rates to reduce demand for house purchases,” UK Finance said in a statement.
Source: The National
Image: Pixabay
