House prices in UK end 2022 on a weak note after post-pandemic boom, Real Estate News, ET Real Estate

LONDON: British annual house price growth marked another “sharp” slowdown in December, mortgage lender nationwide That said, the year ended with a decline as the impact of rising mortgage costs reversed some of the pandemic-led surge in the market.

The lender also said that prices in the last month of 2022 were the worst recorded on a monthly basis since 2008, with their fourth consecutive monthly price decline of 0.1% compared to November. A Reuters poll of economists pointed to a decline of 0.7%.

In annual terms, house price growth slowed to 2.8% in December from 4.4% in November, Nationwide said, compared with a 2.3% growth forecast in a Reuters poll.

House prices have weakened in recent months as the former prime minister Liz TrussThe U.S.’s exorbitant tax cut plans spooked markets and pushed up borrowing costs, making home loans less affordable and causing lenders to suspend mortgage products at a time.

This marked a slowdown from last year when price increases reached multi-year highs due to strong demand as people wanted larger homes that were more suitable for remote work during the health crisis.

“While financial market conditions have stabilized, mortgage rates are taking longer to normalize and housing market activity is showing few signs of recovery,” Nationwide chief economist Robert Gardner said in a statement.

“It will be difficult for markets to gain much momentum in the near term as economic headwinds strengthen, real earnings decline further and the labor market is forecast to weaken widely as the economy contracts.”

new year activity

Earlier in December, a survey by the Royal Institution of Chartered Surveyors (RICS) found the widest fall in house prices Britain since the start of the pandemic last month.

RICS chief economist Simon Rubinson said the downbeat tone reflected an “uncertain macro environment and the high cost of mortgage finance”.

Nationwide’s Gardner, who on Friday reiterated an earlier prediction that home prices were set to drop about 5% next year, also said the recent weakness in mortgage applications may partly reflect an early seasonal slowdown.

He said the housing market remained buoyant in the first three quarters of 2022 despite weak consumer confidence, providing assurances that activity would pick up in the new year.

“Long-term interest rates, which support mortgage pricing, have moved back towards pre-mini-Budget levels. If this persists, it should feed through to mortgage rates and potentially increase the risk,” he said. Should help improve affordability conditions for buyers.”