UK house price growth slows in December as prices fall again – business live | Company
Intro: UK house prices fall 0.1% in December
Hello and welcome to our ongoing coverage of business, financial markets and the global economy.
UK house price growth has slowed sharply again this month, according to new data, with soaring mortgage rates in the autumn cooling the market.
Construction company At national scale reported that prices fell 0.1% in December, the fourth consecutive monthly price decline – and the worst since 2008. This follows a 1.4% drop in November.
Prices were 2.5% below their August peak (after accounting for seasonal effects) according to Nationwide, with the average price now at £262,068.
This brought annual house price growth down to 2.8% from 4.4% in November.
Mortgage rates jumped after the catastrophic mini-budget at the end of September, deterring some borrowers, and have been slow to come down since.
Robert Gardner of Nationwide Chief Economist, says the recent weakness in mortgage applications could represent an early seasonal slowdown:
“While financial market conditions have stabilized, mortgage rates are taking longer to normalize and housing market activity has shown few signs of recovery.
“It will be difficult for the market to regain near-term momentum as economic headwinds strengthen, with real incomes expected to fall further and the labor market expected to largely weaken as the economy contracts.
Nationwide’s housing report also revealed that prices have slowed across the UK. Here are the key points:
All regions see slower annual price growth in the last quarter of the year
East Anglia the best performing region in 2022, while Scotland was the weakest
The gap between the weakest and strongest regions is the smallest since Society’s regional indices began in 1974
Since the first quarter of 2020, price growth for single-family homes has been around twice that of apartments
Housing experts predict that the real estate market will cool down sharply next year after a bumpy 2022, due to rising mortgage rates and a possible recession.
Also coming soon
In the City, it is the last trading day of 2022, with the market due to close early at lunchtime.
It was a very volatile year, with global equities losing about a fifth of their value as the war in Ukraine rattled markets, driving up inflation and prompting central banks to raise interest rates sharply. ‘interest.
The United Kingdom FTSE 100 index however outperformed most international rivals. It is up about 1.7% since the beginning of January, helped by oil companies PB and Shell (both up more than 40% in 2022) and a defense company BABY Systems (up 56% this year).
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Higher mortgage costs, along with the rising cost of living, are having an inevitable impact on housing affordability, says Mark Harrismanaging director of a mortgage broker FPS Private Clients.
“The volatility in swap rates triggered by the mini-budget has largely dissipated and mortgage rates have stabilized thanks to this. Lenders continue to price their fixed rate mortgages down, but even so there are still plenty of people coming out of the patches and facing payment shock. We expect lenders to come to market with more attractive pricing in January as they start from scratch in terms of building their business for the new year.
“Further interest rate hikes are expected in the coming year as the Bank of England continues its efforts to control inflation. However, a lower rate spike than previously thought may be sufficient, making life easier for borrowers.
Scotland was the worst performing region in the UK, with annual property price growth of 3.3%.
Wales experienced a significant slowdown – annual growth fell from 12.1% in the third quarter of 2022 to 4.5% in the fourth quarter.
North Ireland saw prices increase by 5.5% in 2022, compared to a rise of 12.1% in 2021.
The 0.1% fall in UK house prices in December is smaller than expected by economists, points out Victoria Scholar, investment manager at interactive investor:
“UK December National house prices fell 0.1% month-on-month, better than expected for a 0.7% drop but improving on the down 1.4% from November. Year-over-year, house prices rose 2.8% also ahead of the 2.3% forecast, but down from November’s reading of +4.4%.
December saw the fourth straight month of negative house price growth, the worst since 2008, leading to a significant drop in the annual figure from November, with all regions experiencing a slowdown. East Anglia was the best performing region while Scotland was the weakest. The housing market is struggling under pressure from the fallout from the mini budget, the Bank of England’s rate hike path, the cost of living crisis and a looming recession. Many potential buyers are hesitant to look for a property at the moment, hoping that house prices will continue to fall and mortgage rates will fall next year.
Homebuilding stocks have had a tough year with Taylor Wimpey down more than 40%, Barratt Development down more than 45% and Persimmon down more than 55% since the start of the year.
Given the ‘chaotic backdrop’ and high mortgage rates in recent months, potential home buyers may have chosen to wait until the New Year to see how mortgage rates move before deciding to enter the market, suggests At national scale chief economist Robert Gardner.
The recovery in activity in the new year should “remain tepid until the general economic outlook improves”, Gardner predicted.
He hopes, however, that a “soft landing” can be achieved next year, suggesting prices could fall 5% in 2023 (other forecasters have suggested they could fall 10%).
Gardner said:
“Longer-term interest rates, which underpin mortgage pricing, have returned to pre-mini-budget levels. If it continues, this should feed through to mortgage rates and help improve the affordability position for potential buyers, as well as solid rates of revenue growth (with wages currently growing at a pace of around 7% in the private sector), especially if combined with growth low or negative real estate prices.
“But the main factor that would help achieve a relatively soft landing (particularly for house prices) is whether the forced sale can be avoided, and there are good reasons to be optimistic on this front. most forecasters expect the unemployment rate to reach 5% in the coming years – a significant increase, but still low by historical standards.
Intro: UK house prices fall 0.1% in December
Hello and welcome to our ongoing coverage of business, financial markets and the global economy.
UK house price growth has slowed sharply again this month, according to new data, with soaring mortgage rates in the autumn cooling the market.
Construction company At national scale reported that prices fell 0.1% in December, the fourth consecutive monthly price decline – and the worst since 2008. This follows a 1.4% drop in November.
Prices were 2.5% below their August peak (after accounting for seasonal effects) according to Nationwide, with the average price now at £262,068.
This brought annual house price growth down to 2.8% from 4.4% in November.
Mortgage rates jumped after the catastrophic mini-budget at the end of September, deterring some borrowers, and have been slow to come down since.
Robert Gardner of Nationwide Chief Economist, says the recent weakness in mortgage applications could represent an early seasonal slowdown:
“While financial market conditions have stabilized, mortgage rates are taking longer to normalize and housing market activity has shown few signs of recovery.
“It will be difficult for the market to regain near-term momentum as economic headwinds strengthen, with real incomes expected to fall further and the labor market expected to largely weaken as the economy contracts.
Nationwide’s housing report also revealed that prices have slowed across the UK. Here are the key points:
All regions see slower annual price growth in the last quarter of the year
East Anglia the best performing region in 2022, while Scotland was the weakest
The gap between the weakest and strongest regions is the smallest since Society’s regional indices began in 1974
Since the first quarter of 2020, price growth for single-family homes has been around twice that of apartments
Housing experts predict that the real estate market will cool down sharply next year after a bumpy 2022, due to rising mortgage rates and a possible recession.
Also coming soon
In the City, it is the last trading day of 2022, with the market due to close early at lunchtime.
It’s been a very volatile year, with global equities losing about a fifth of their value as the war in Ukraine rattled markets, driving up inflation and prompting central banks to raise interest rates sharply. interest.
The United Kingdom FTSE 100 index however outperformed most international rivals. It is up about 1.7% since the beginning of January, helped by oil companies PB and Shell (both up more than 40% in 2022) and a defense company BABY Systems (up 56% this year).
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