Asking prices for homes coming on to the market in the UK are nearly £10,000 lower than they were in October, as the property market headed for its worst annual performance in almost a decade.
The average asking price of a UK home dipped by 3.2%, or £9,719, between October and December to £297,527, according to the property website Rightmove, with prices dipping 1.7% and 1.5% in November and December respectively.
A softening of prices at the end of 2018 meant that asking prices rose by just 0.7% over the year as a whole, the weakest rate of growth since 2010. The traditional hotspots of London and south-east England became the weakest spots this year, recording the biggest annual falls in asking prices.
This followed a 1% rise in UK asking prices in 2017. Rightmove is predicting zero growth in UK prices in 2019, against a backdrop of stretched affordability and Brexit uncertainty.
The property market is a cornerstone of the British economy and drives a large proportion of consumer spending, from DIY to carpets and furniture. But with buyers and sellers reluctant to pay the current market prices, especially in the east and south of England where prices have rocketed in recent years, analysts expect the difficult conditions to radiate out from the property market to other areas of spending.
And while a slowdown in prices will be welcomed by younger buyers and those on lower incomes, any falls in values are expected to add the pressure on MPs to agree a Brexit deal.
Miles Shipside, a Rightmove director and housing market analyst, said there was more to the drop in asking prices than the usual festive slowdown in buyer interest. He said: “It’s usual for new-to-the-market sellers to price lower in the run-up to Christmas to tempt distracted buyers, so we should not read too much into the mere fact of two consecutive monthly falls.
“However, these falls have been larger than usual, making this the largest fall over two months for six years, showing that there are more than just seasonal forces at play.”
In London, and east and south-east England – the three regions where house prices rose the most since 2012 – asking prices are now falling year-on-year. Prices were down 1.1% in the capital in the year to December at £602,996, by 0.9% in the south-east at £389,180 and by 0.7% in the east at £341,818.
A fall in these commuter-belt regions suggests that the “ripple effect”, where fast-rising prices in London filtered through to surrounding areas during the boom years, has now reversed, with falling prices in the capital now spreading across the south.
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