(Jan 2): UK house prices unexpectedly fell in December, according to a top mortgage lender, in a sign that the property market may have been affected by Labour’s tax-hiking budget.
Nationwide Building Society said the average price of a home was down 0.4% to £271,068, declining for the first time in four months. It reversed November’s 0.3% increase and defied analysts’ expectations of a 0.1% gain to end the year.
Chancellor of the Exchequer Rachel Reeves’ budget on Nov 26 lifted taxes by £26 billion and announced a new levy on homes worth more than £2 million. These make up a small fraction of the UK’s total housing stock, yet confidence remains subdued across the market.
The Bank of England’s (BOE) decision to cut interest rates to 3.75%, the lowest since 2023, in December will provide some support to homebuyers. However, affordability is likely to remain stretched as the BOE said it is nearing the end of the easing cycle.
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