U.K. house prices in December dropped for a fourth consecutive month, the longest stretch since the 2008 financial crisis, lender Nationwide reported on Friday.
The monthly drop was just 0.1%, compared to the 1.4% decline in November and 0.9% in October.
Still, prices are now 2.5% below their August peak.
Annual house price growth in December fell sharply to 2.8% from 4.4% in November. Average house prices dropped by 0.1% month-on-month – “a much smaller decline” than prior months, said
The average house in the U.K. was priced at £262,068 ($316,000) during December, down by just over £1,700 compared with November.
“While financial market conditions have settled, mortgage rates are taking longer to normalize and activity in the housing market has shown few signs of recovery,” said Robert Gardner, Nationwide’s chief economist.
“It will be hard for the market to regain much momentum in the near term as economic headwinds strengthen, with real earnings set to fall further and the labour market widely projected to weaken as the economy shrinks.”
Gardner added that he wouldn’t be surprised if potential house buyers waited until the new year to see how mortgage rates evolve, given long-term interest rates are heading back to the levels seen before the mini-budget in September.
“Longer-term interest rates, which underpin mortgage pricing, have returned towards the levels prevailing before the mini-Budget,” he said. The yield on the 10-year gilt
was 3.70% on Friday, compared to a peak of 4.64%.
“If sustained, this should feed through to mortgage rates and help improve the affordability position for potential buyers, as will solid rates of income growth, especially if combined with weak or negative house price growth.”