UK Property Price Slump 3.2% In December

UK property prices have fallen 3.2% during December due to financial uncertainty and higher borrow costs Rightmove has found.

The survey has shown that asking prices for property are 3.2% lower than they were in November, which is the biggest fall since the data series began back in January 2002 and is a far sharper fall than last months drop of 0.7%.

Rightmove explained that this price drop has been exacerbated by the annual winter slowdown as well as first time sellers avoiding the Home Information Packs (HIPS) legislation, which accounted for 1.1% of the monthly fall.

UK house price inflation has also eased in the past year from 7.9% to 4.8% in the past 12 months.

The survey has also mentioned that London’s property market also suffered from the ‘HIPS effect’, accounting for a 2.3% of a 6.8% monthly slump, which is also the sharpest monthly fall since Rightmove started collecting property price data.

However, the majority of the falls are because of the current tough market conditions and many sellers who have listed properties this month have listed below the market to try and sell, said Miles Shipside, commercial director at Rightmove.

However it is wrong to speculate that property prices will continue to fall based on one months statistics from a quiet December.

Looking ahead, the tough credit conditions caused by high interlink lending rates will keep the property market in uncharted territory in 2008 said Rightmove.

We need a further 0.5% cut in the cost of credit to borrowers early in 2008 just to return the market borrowing rates to where they were before the credit crisis said Shipside.

'We are in a different world compared to previous housing downturns. It is a world of international banking interdependencies, and a world in which the robustness of the UK housing market has never been tested,' he said.