London — British house prices unexpectedly fell in December compared with November, their first decline in six months, mortgage lender Halifax said on Monday, adding to signs of weakness in the country’s housing market since the 2016 Brexit vote.
House prices slipped by 0.6% month-on-month after a 0.3% rise in November, Halifax said.
Economists taking part in a Reuters poll had expected prices to rise by 0.2%. On an annual basis, house price growth slowed to an annual 2.7% in the three months to December, weaker than a rise of 3.9% in November. The Reuters poll of economists had pointed to a 3.3% rise.
Shortly before the referendum decision to leave the European Union in June 2016, Halifax was reporting annual gains in house prices of around 10%. The pound’s fall after the vote pushed up inflation and added to pressure on the finances of households. Furthermore, many businesses are holding back on investment decisions as they await clarity on Britain’s future relationship with the EU.
Samuel Tombs, an economist with Pantheon Macroeconomics, said the Bank of England’s first interest rate hike in more than a decade, made in November, was also weighing on the market.
"Halifax’s data suggest that the recent jump in new mortgage rates has poured cold water on a market that already was flagging," he said.
Two surveys published earlier on Monday showed that British shoppers tightened their belts over Christmas, leading to the first year-on-year fall in spending since 2012, and leading businesses aim to do the same over 2018.
"The housing market in 2017 followed a similar pattern to the previous year," Russell Galley, managing director of Halifax Community Bank, said.
"House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchase all remained flat. This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy."
However, a shortage of homes up for sale was likely to continue to shore up the market and Halifax reiterated its forecast for growth of between 0% and 3% in house prices in 2018.
Last week, rival mortgage lender Nationwide said its measure of British house prices grew last year at its slowest pace since 2012 and in London it fell for the first time in a full year since 2009.