The housing market is experiencing further slowing with asking prices on homes in Britain experiencing the largest monthly fall on record for a December.  However, seasonal slowdowns are not surprising this time of year and there are expected increases for next year between 4% and 5% according to property website lister, Rightmove.

The slowdown is also being blamed on meager wage earnings growth and tighter mortgage lending guidelines. The Mortgage Market Review guidelines that were put into place in early 2014 are meant to assist borrowers into mortgage and remortgage loans they can afford.  Lenders are expected to verify that a loan is affordable not only at the time the loan is obtained, but even if interest rates increase. Lenders require detailed information of the borrower’s habits of spending and saving to determine approval and they also put the data through a stress test for future interest rate hikes.

December’s house price index from Rightmove reported a 3.3% decrease in asking prices for properties coming onto the market. The average was £258,424.

For 2014, UK asking prices rose 7%.

The supply of homes currently on the market have fallen and as demand grows, so should property values and seller’s asking prices in the coming year.

Economists are still warning that an interest rate increase will occur by the Bank of England in the first half of next year.  The December meeting of the Bank’s Monetary Policy Committee (MPC) left the historically low standard base interest rate at 0.5%.  It has gone unchanged since March 2009. Minutes from the meeting will be released next week and will reveal if any members voted for an increase of the rate.