The housing market is well and truly off the boil, as highlighted by an online real estate companyís reporting of the highest monthly fall in asking prices since records began.
Rightmove said that new properties coming onto the market fell month-month by an average of £8,703 in December to £258,424, representing a 3.3% month-month drop bringing the yearly rate of house price growth to 7% for the year.
Property prices have been tumbling since their peak in July, with a range of price cooling measures undertaken by policymakers seemingly having their desired effect as buyer demand continues wane. This dampening effect is particularly profound in London, as property prices across the Capital fell in unison by over £30,000, with areas in South West London particularly affected.
ìLondon will not be the price rise powerhouse leading the rest of the country as it has been in 2014,î it said.
ìSectors of the London market will continue to readjust with several different forces at play. Affordability has already been stretched to its limit in some inner London locations, and there are also winners and losers with the stamp duty changes. The threat of mansion tax on properties over £2m will remain a deterrent until at least Mayís election.î
Despite this, Rightmove added their voice to the number of experts believing house price growth will continue into 2015, albeit at a more gradual pace than that seen over 2014. Though asking prices have fallen over the past 2 months, properties in every region of the UK have all grown in value over the past 12 months, including London which has seen houses grow by 11.1% in the 12 months to December 2014.
Rightmove noted that the wintery months are typically quiet as far as housing activity is concerned, and Decemberís record decrease could be down to the ongoing effect of tighter lending criteria and apathy brewing in the build up to a prospective new government ñ keen on a mansion tax – combined with the traditional shortage of buyers in the market during December.
However, the start of 2015 could see more housing transactions as buyers enter the market seeking to take advantage of high-value mortgage rates, the last few months of a record low base rate and changes to stamp duty which could result in houses being priced below thresholds as sellers seek to stick out from the crowd.
However, Rightmove forecasted the spiralling rate of house price growth seen in the first half of 2014 will not be mirrored in the new year.
Miles Shipside, director at Rightmove, said: “A steady market is a lot better because it stops personal indebtedness getting too high when people take out large mortgages to pay for every increasing values in property. A sensible upwards trend is traditional for a healthy market but things got a bit too frothy last year and that couldnít continue.î
As the market became increasingly turbulent last year, the restrictions imposed on lenders within the Mortgage Market Review and a more cautious stance taken by buyers who remember all too well the debilitating effects of the recession led to falling mortgage approvals and a slower rate of completed transactions; a trend which Mr Shipside will continue into 2015, predicting a house price growth of between 4 and 5% for next year.
ìWhilst a near £9,000 drop is the biggest ever reduction in the price of newly marketed property compared to the month before and a sign of a market continuing to cool, a fall is not unexpected in December:î said Mr Shipside.
ìThe overall picture for the year is still one of a much recovered property market, with sellers and their estate agents confident enough to be putting property on the market at a higher price on average than a year ago, although we predict a slower pace of price growth in 2015:î he added.
Save money on your mortgage by comparing interest rates with MoneyExpert.