Cracks appear in UK housing market as home prices fall for first time in 9 months

LONDON — U.K. house prices fell for the first time in nine months in December, as the country's Budget and higher mortgage rates dampened a recent flurry of homebuyer activity.

Average property prices dipped 0.2% between November and December — the first monthly drop since March — fresh data from lender Halifax showed Tuesday. That was below the 0.4% price rise forecast by economists polled by Reuters.

It means the average property value in the country fell slightly to £297,166 ($372,560).

House prices rose 3.3% on the year in December, but annual price growth was also down from 4.7% in November and below the 4.2% predicted by economists.

Shares of U.K. homebuilders Taylor Wimpey, Persimmon, Bellway and Barratt Redrow all fell following the data release Tuesday morning.

U.K. house prices rose at a steady clip in 2024, increasing for five consecutive months following a brief spell of stagnation as sentiment picked up on the back of the U.K. election and the start of the Bank of England's rate cutting cycle.

However, a cooling of interest rate expectations — including on the back of the government's tax-and-spend Budget, which pushed up U.K. borrowing costs — put pressure on transactions toward the tail end of the year.

Amanda Bryden, head of mortgages at Halifax, said higher mortgage rates were likely to continue to weigh on the market in 2025, even as price growth remains "modest."

"Mortgage affordability will remain a challenge for many, especially as the Bank Rate is likely to come down more slowly than previously predicted," Bryden said.

The downtick in house prices comes after mortgage approvals fell short of expectations in November and came in below the number recorded in October, according to data released Friday by the