House prices drop for first time since last June - Halifax
House prices in the UK fell in December for the first time since June last year, according to data from lender Halifax.
House prices across the UK fell 0.6% last month following 0.3% gains in November and October and missing expectations for a 0.2% increase.
Prices in the last three months of 2017 were up 2.7%, slowing down from a 3.9% jump in November and falling short of expectations for a 3.3% increase.
Russell Galley, managing director at Halifax Community Bank, said: “As we’d anticipated, the housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, whilst 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."
Nevertheless, Halifax still expects house prices to rise this year.
"Nationally house prices in 2018 are likely to be supported by the ongoing shortage of properties for sale, low levels of housebuilding, high employment and a continuation of low interest rates making mortgage servicing affordable in relative terms. Overall we expect annual price growth to continue in the range of 0-3% at the end 2018,” said Galley.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Halifax’s data suggest that the recent jump in new mortgage rates has poured cold water on a market that already was flagging. The average quoted rate for 2-year and 5-year fixed rate mortgages has leapt by 21bp and 13bp, respectively, since September’s low point. Unlike the official, transaction-based data, Halifax’s index is based on its mortgage offers, so it already will have captured the impact of the rise in borrowing costs. In addition, Halifax’s index had been on a tear in previous months, rising by 3.6% between June and November.
"This strength had not been mirrored by other indices, so a correction was overdue. Looking ahead, the recent further decline in new buyer interest reported by RICS and NAEA, as well as the drop in consumer confidence, indicates that upward pressure on prices will remain modest. Furthermore, we remain concerned that new mortgage rates will rise further from the end of February, when new lending by banks no longer will generate borrowing allowances from the Term Funding Scheme.