December sees biggest drop in property price tags in four years

The average price tag for a home has dropped by almost £8,000 this month – the biggest drop in four years, according to new data.

Rightmove’s figures showed that asking prices for newly listed properties across the UK fell 2.1% in December to the equivalent of £7,862.

The real estate portal noted a larger-than-normal seasonal slowdown, showing buyers shelving their moving plans amid greater economic turmoil and widely-reported rises in mortgage rates.

This is an understandably short-term response to the economic turmoil we saw in late September and October, as well as unexpected increases in mortgage rates and reduced availability of mortgage products.

Tim Bannister, director of property science at Rightmove

At the end of 2022, average prices are 5.6% higher than a year ago and just below the 6.3% level or growth recorded at the end of 2021.

Rightmove means a less frenetic housing market is more willing for sellers to lower asking prices in their efforts to find a buyer faster.

“While we always expect prices to drop in December, as Moveli sellers try to grab a buyer’s attention before Christmas at a competitive price, this monthly drop is the biggest we’ve seen in four years,” said Tim Bannister, Rightmove’s director. said property science.

“This is a short-term response to the economic turmoil and unexpected increases in mortgage rates and a reduced availability of mortgage products that we saw before things started to calm down in late September and October.”

But Rightmove said there are signs that some buyers can expect the market to settle down and wait for a better flat-rate mortgage deal in the new year.

Inquiries to realtors have increased by 4% over the past two weeks compared to 2019, and views for homes for sale on Rightmove have increased by 11% year over year.

“Our data shows that there are many ready shippers waiting for what they think is the right time to enter the market in 2023,” Bannister said.

He added that there may be a recovery in prices in February after the heavy house-moving period in January.

Rightmove projects an overall 2% drop in average demand prices next year as the economic headwinds continue and the market returns to normal.

Pressures on household finances may mean that some customers have fewer options.

James Tatch, head of data and research UK Finance

The data comes after trade body UK Finance said it expects the number of real estate transactions to drop by more than a fifth next year, returning the market to pre-pandemic levels.

It also predicts mortgage lending to homeowners will decline by 23% due to affordability pressures faced by borrowers and higher interest rates.

However, UK Finance said the vast majority of borrowers will be able to keep up with their mortgage payments and arrears will likely only increase marginally.

James Tatch, head of data and research at UK Finance, said: “The high level of activity during the 2021 stamp duty holiday means that a large number of borrowers will need to refinance next year, raising the expected value of refinancing in 2023.

Pressures on household finances may mean that some customers have fewer options.

“However, product transfers are available in a wide range, and we encourage clients to speak with their entire market mortgage advisor to discuss the options that best suit their circumstances.”

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