House prices in the UK dropped for a sixth month in December, and will remain down next year due to weak housing demand and tighter lending conditions, according to Hometrack.
The average cost of a residential property in the UK fell 0.4 percent in November and will drop further by 2 percent next year, said the London-based property researcher.
“We expect house prices to remain under downward pressure in the first half of 2011 on the back of weak demand,” said Richard Donnell, director of research at Hometrack.
However, he said that “a tightening in supply together with continued low levels of housing transactions will continue to act as something of a support to pricing levels.”
Demand for homes fell 4.8 percent this month from November, reflecting the biggest drop since January 2009.
The average value of a home dropped 1.6 percent this year, and the supply of homes for sale climbed 24 percent, said Hometrack.
The UK housing market has weakened in the past few years, as banks have tightened lending requirements causing the level of mortgage loans to drop below 50 percent as seen during the property boom in 2007.