U.K. House Prices Post Their First Monthly Decline Since April

(Bloomberg) -- Reports that the U.K. housing market lost momentum around the turn of the year were confirmed by official figures Wednesday showing prices fell in January for the first time in nine months.

The 0.5% decline from December left values 7.5% higher than a year earlier, according to Land Registry data published by the Office for National Statistics. The annual pace of growth eased from 8% in December, the first slowdown for that measure since July. The average price of a home stood at 249,309 pounds ($342,000).

The decline may prove to be temporary, however, with many estate agents predicting another good year for the housing market. Optimism about the outlook for the economy has grown since more than half of British adults have been vaccinated against coronavirus and the government set out plans to end lockdown.

Chancellor of the Exchequer Rishi Sunak’s decision this month to extend a tax break on homebuying until June 30 is also expected to boost demand.

The prospect of the stamp duty holiday ending in March, as originally planned, acted as a drag on the market going into 2021. Mortgage lenders Nationwide and Halifax reported falling prices in January their monthly surveys.

Values rose strongly during the pandemic, defying an economy that last year suffered its deepest slump for three centuries. Government figures this week showed that more than 147,000 residential property transactions were completed in February, almost 50% more than a year earlier and the most since well before the financial crisis.

The decline in prices in January was not uniform across the country. Values fell 2.3% in the West Midlands but rose 0.7% in the North West and the East of England. London and the South East, among the worst performers over the past year, posted modest 0.1% gains for the month.

London also lagged behind when it comes to rents for housing, separate ONS figures show. Private rental prices in the capital rose just 0.8% in the year to February, compared with a U.K. average of 1.4%.

©2021 Bloomberg L.P.