Published : 2 years ago, on 16/01/2023

By Suban Abdulla

LONDON (Reuters) – Asking prices for British homes rose for the first time in two months as the housing market showed signs of calming after the turmoil triggered by former prime minister Liz Truss’s “mini-budget”, property website Rightmove said on Monday.

Asking prices for residential properties increased by 0.9%, or 3,301 pounds ($4,032.50) in the Dec. 4-Jan. 7 period from a month earlier, after a 2.1% fall over the previous month, Rightmove said.

It was the biggest gain at this time of the year since 2020. However, average asking prices were still 2% below their October 2022 peak.

Britain’s property sector slowed in recent months as borrowing costs jumped and the risk of recession grew.

Economists polled by Reuters in November forecast that house prices would dip 5% in 2023, while analysts at Nomura said last week they expected prices to fall by 15% by mid-2024.

The Bank of England hiked interest rates at its last nine meetings from 0.1% to 3.5% in an attempt to bring inflation, which was running at 10.7% in November, back to its 2% target.

Other measures of the housing market, including data on agreed house price sales from mortgage lenders Nationwide and Halifax, have shown prices falling as the rising cost of living squeezes home-buyers.

However, average two- and five-year fixed mortgage rates have eased after surpassing 6% in October in the aftermath of Truss’s failed tax cuts plan.

Two- and five-year fixed rates have fallen for a second month to 5.8% and 5.6% respectively, according to data from website Moneyfacts.

“The seasonal increase in new seller asking prices this January from December is particularly encouraging for movers who are looking for the reassurance of familiar trends and a calmer, more measured market after the rapidly changing and at times chaotic economic climate of the final few months of last year,” Tim Bannister, director of property science at Rightmove said.

Home buyer demand at the beginning of 2023 was up 4% compared with the same period in 2019, before the pandemic market frenzy, but was down 36% compared to last year.

In annual terms, property prices rose 6.3% in January, up from a rise of 5.6% the month before.

($1 = 0.8186 pounds)

(Reporting by Suban Abdulla; Editing by William Schomberg)