By David Milliken
LONDON Jan 8 British house prices fell
unexpectedly last month in their first drop since the start of
2013, easing some pressure on a fast-rising market, but they are
likely to rise further in 2014, mortgage lender Halifax said on
British house prices rose strongly in 2013, bolstered by
rapidly falling unemployment, greater economic confidence and
schemes from the government and the Bank of England to revive
mortgage lending and construction after the financial crisis.
But Halifax, part of Lloyds Banking Group, said
property prices finished the year on a weaker note. House prices
dropped by 0.6 percent in December, causing the year-on-year
rate of house price growth to slow to 7.5 percent from
November's six-year high of 7.7 percent.
None of the economists polled by Reuters before the data
said they had expected a monthly fall in house prices. Halifax
revised down November's price increase to 0.9 percent from an
initial estimate of 1.1 percent.
Halifax's data also showed slower growth than data from
rival mortgage lender Nationwide, which reported a 1.4 percent
rise in house prices in December to give an annual increase of
8.4 percent, the biggest in more than three years.
However, Halifax said it still expected house prices to rise
in 2014 by around 4-8 percent, and some economists think they
could rise faster.
"There is still a very real risk that a new housing bubble
could really develop in 2014, especially as there is mounting
evidence ... that the strength in house prices is becoming
widespread," said Howard Archer, chief UK economist at IHS
Global Insight, who expects prices to rise 8 percent.
The government was criticised by many economists for
extending its Help to Buy scheme in October to make it easier
for home-buyers to get mortgages with a 5 percent deposit,
something the government hopes will spur construction.
In November, the BoE announced it would scrap the aspect of
its Funding for Lending Scheme that offered banks cheap finance
if they increased mortgage lending.
Central bank data for that month showed lenders approved the
greatest number of mortgages since 2008.
But Halifax does not expect prices to get out of control
because weak wage growth should limit buyers' purchasing power.
"Continuing pressures on household finances, as earnings
again fail to keep pace with consumer price inflation, are
expected to constrain demand," its housing economist Martin
In another sign of the fragility of consumer demand, data
from the British Retail Consortium released earlier on Wednesday
showed that high-street stores were engaged in the biggest
pre-Christmas discounting on record.
Halifax said the average property price was 173,467 pounds
($284,500) in December, equivalent to 4.7 times average annual
earnings for a full-time male employee.
Ellis added that recent price rises were also likely to
tempt more home-owners to sell, boosting supply and limiting
further price gains.