House prices rose for the fourteenth consecutive month in December but the pace of increase eased back to August levels.
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The pace of increase remains strong, above the long-run average of 21 percent, but this is the first real evidence that the November rate rise has started to take some of the heat out of the market.
Although the market experienced its first slowdown since 2004, it remains firm, sustained by a booming city economy and a strong financial services sector.
House prices remain strong in London with few signs of the market easing up despite higher interest rates. House price rises in the North have accelerated but outside London, the South East has started to slowdown. Northern Ireland continues to grow as the weight of money from the Republic of Ireland supports the market in light of lower Eurozone interest rates.
Completed property sales rose to 28.5 per surveyor from 28.4 in September the highest since August 2004. The ratio of completed sales compared to the stock of available property rose to 42.8 percent from 42.5 percent.
This is the highest ratio in two years and a strong indicator of a still buoyant market. New buyer enquiries stabilised in December reinforcing the strength of the underlying economy in light of the two quarter point interest rate hikes that have taken place since August.
The recent interest rate increases have slightly dented surveyor confidence but confidence in price outlooks are viewed as stronger than the surveys long run average.
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RICS spokesman, Ian Perry, said: Interest rate rises have started to cool the housing market and last weeks rise will have a further impact in the coming months, but the market remains strong. However, the rate rise will do nothing to aid home owners struggling with affordability conditions with more repossessions looming on the horizon.
As we move further into the new year, consumers will begin to tighten their belts as finances come under pressure but rising wages and employment will continue to boost the economy and RICS expects interest rates to finish at 5.5 percent by year end.
