Market News
UK House Prices in First Drop for Nine Months, Halifax Says - BLOOMBERG
(Bloomberg) -- UK house prices slipped back for the first time in nine months even as the property market enjoyed its best year since the pandemic, according to one of the country’s largest mortgage lenders.
Average house prices dropped 0.2% in December from a record high to £297,166 ($372,630), Halifax said Tuesday. For the year as a whole, prices were up 3.3%.
The overall growth in prices for 2024 was still the housing market’s strongest performance since 2021 when it was sent rocketing by the end of Covid lockdowns and a huge tax break for homebuyers.
The drop in prices last month came amid stuttering economic growth, and with mortgage rates remaining stubbornly elevated despite cooling from 2023 highs. Borrowing costs crept up after Labour’s fiscally-stimulative October budget threatened to slow Bank of England interest rate cuts.
“The current rate of house price growth will come under more pressure as higher borrowing costs triggered by the Budget start to bite,” said Tom Bill, head of UK residential research at Knight Frank.
“We recently revised down our UK house price forecast for 2025 to 2.5% to reflect the tougher lending landscape and the fact economic growth is struggling to gain momentum.”
Interest Rates
Sticky price pressures meant the central bank lowered rates just twice last year, and markets are only fully pricing in a further two reductions by the end of 2025.
Moneyfacts data shows that the average two-year fixed mortgage rate has risen to 5.47%, up from 5.39% on the eve of the Oct. 30 budget that economists expect to feed inflationary pressures.
Recent data has shown a mixed picture for the property market heading into 2024. The number of approved mortgages fell in November, the BOE said last week, although a separate survey from Nationwide Building Society painted a more bullish picture, with prices rising again in December.
Halifax said London saw growth in line with the national average in 2024 with valuations rising 3.3% to £547,614.
Northern Ireland was the best performing region last year, enjoying house price growth of 7.4%. Scotland’s 2.4% increase in valuations was the weakest of the UK nations.
While elevated borrowing costs may limit gains, there is likely to be a flurry of activity in the housing market over the coming months as a tax break expires in April.
“Impending changes to Stamp Duty thresholds have also given prospective first-time buyers even greater motivation to get on the housing ladder and bring any home-buying plans forward,” said Amanda Bryden, head of mortgages at Halifax.
--With assistance from Andrew Atkinson.
