UK house prices fell unexpectedly in December, their first fall in six months, according to Halifax. The average price of a home fell by 0.6% to £225,021 in December, the mortgage lender said. The annual growth rate declined to 2.7% in the three months to December from 3.9% in the previous three months.
Many forecasters are expecting the market to slow further, pencilling in UK price growth of about 1% this year, which would mean property values falling in real terms (when adjusted for inflation). London prices are expected to continue to slide, in stark contrast to the 70% growth seen over the past decade.
Nationwide, the UK’s other major mortgage lender, reported last week that UK house prices increased by just 2.6% last year, while prices in London dropped for the first time in eight years. It predicted price growth would slow further in 2018 to 1% to 1.5%.
Halifax expects house prices to grow at an annual pace of 0% to 3% by the end of 2018. Mortgage approvals for house purchases remain flat, while inquiries from new buyers have fallen for the past eight months. Halifax’s managing director, Russell Galley, said: “The housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, while building activity, completed sales and mortgage approvals for house purchase all remained flat. This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy.”
He said a squeeze on wages and uncertainty over the economy were continuing to put potential house buyers off, although a shortage of properties on the market, low levels of housebuilding, high employment and low mortgage rates would underpin the market to some extent.