The average house price dropped by almost £8,000 this month – the largest dip seen in four years, according to new data.
For those looking to get onto the property ladder, it's tempting to think that falling house prices will make it easier to buy, but that's not always the case. At the moment, a drop in property prices represents rates returning to their normal levels after the pandemic, when prices shot up dramatically.
Renters who don't want to, or can't afford to consider buying might think a drop in house prices will mean they'll a drop in their rents as well, but this is unlikely. In fact, renters saving for a house deposit could face higher rent as demand for let properties increases.
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Figures from Rightmove show asking prices across the UK for newly listed properties dropped by 2.1% in December, equivalent to £7,862. Rightmove said this is a bigger drop than usual for the time of year, and indicates that buyers have put moving plans on ice amid greater economic turmoil and widely-reported mortgage rate surges.
House prices decreasing can mean that people's rents will go up, as landlords look to maximise the amount they are making from their extra properties that are decreasing in value. Supply and demand has the biggest impact on rents, so if more people are holding off on buying waiting for interest rates to calm down, then rents for short-term lettings could go up as demand increases.
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Tim Bannister, Rightmove’s director of property science said: “Though we would always expect prices to drop in December, as motivated sellers try to capture the attention of a buyer before Christmas with a competitive price, this monthly dip is the largest we’ve seen for four years.
“It‘s an understandable short-term reaction to the economic turmoil and unexpectedly rapid mortgage rate rises and reduction in availability of mortgage products that we saw in late September and October, before things began to settle down.”
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