- House prices decline for fourth month in a row
- Lenders see prices falling further this year
- Housing and infrastructure activity contracts
The new year has hardly got off to a flying start for the developers with two of the most closely-watched surveys showing house prices continuing to fall at the end of 2022.
Adding to the negative news, the latest UK construction purchasing managers’ survey showed activity hitting its lowest level since the pandemic.
PRICES TOPPING OUT
The price of the average UK home dropped 1.5% between November and December to £281,272, marking four consecutive months of falling prices according to the Halifax building society.
‘Uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, is leading to an overall slowing of the market’, commented Halifax director of mortgages Kim Kinnaird.
The society expects house prices to fall 8% this year as buyers and sellers become more cautious given the growing economic uncertainty.
The Nationwide survey also showed average UK house prices falling for a fourth consecutive month in December to £262,068, more than £10,000 below their August peak.
The key to a ‘soft landing’ for prices this year is consumer confidence, which depends to a large degree on labour market confidence.
Robert Gardner, Nationwide chief economist, sees average prices falling by 5% unless there is a ‘significant deterioration in the labour market or more elevated mortgage rates’, in which case double-digit declines could be on the cards.
BUILDING ACTIVITY STALLING
The UK construction sector as a whole experienced a drop in business activity in December with the rate decline the fastest since May 2020, in the midst of the pandemic, according to the latest S&P Global/CIPS UK Construction PMI survey.
At the same time, sentiment towards the year-ahead dipped into negative territory for only the sixth time since the survey began more than 15 years ago, with pessimism translating into job losses for the first time since the start of 2021.
Although commercial construction expanded in the final month of last year, it was outweighed by declines in infrastructure and housebuilding.
Most worrying, the volume of new orders placed with contractors fell at the quickest rate since May 2020 due to weak client demand and steady rises in material and labour costs.
