(Bloomberg) -- UK home sellers slashed the prices they’re asking for property, data from the sales portal Rightmove showed, a sign that a “slow puncture” for the market is likely to continue.

The figures showed a 1.9% drop for December when buyers usually trim expectations to pin down deals, but this year’s drop was sharper than the 20-year average. A separate report from UK Finance, which represents banks, predicted lending for house purchases will fall by 8% over 2024 to £120 billion ($150 billion). 

The reports together indicate that a slump in prices in 2023 is likely to return despite data from mortgage lenders showing prices edged up in the past few months. While a shortage of properties on the market and easing in mortgage rates has helped support prices, analysts still see affordability issues and economic gloom as headwinds for the housing market.

Buyers are strained by “higher interest rates and the increased cost of living, as well as house prices still at elevated levels relative to income,” said UK Finance’s Head of Analytics James Tatch. “With these pressures unlikely to ease significantly in the short term, we expect lending to remain weak in 2024.”

Rightmove said the latest data lopped £6,966 off the average asking price, taking it to £355,177 ($445,210). It follows November’s report showing the largest fall for that month in five years. 

Tim Bannister, Rightmove’s director of property science, said the slide in asking prices reflected sellers trying to become more competitive as demand remained muted. 

“Further price falls beyond the usual seasonal trends that we’d expect at this time of year signal that some new sellers are continuing to act on the advice of agents to price competitively,” he said, citing higher mortgage rates which have stretched affordability for potential buyers.

The UK property market has remained surprisingly resilient despite the sharpest series of interest-rate increases from the Bank of England in three decades. A year ago, economists had predicted a peak-to-trough fall in prices of 10% or more, but on Nationwide and Halifax’s measures the drop has only been around half of that. 

The strength reflects a labor market that has held up better than expected during a cost-of-living crisis, limiting the number of forced sales. Just last week the BOE said it now expects far fewer households will struggle to meet mortgage repayments than it originally thought. 

The mortgage lenders Halifax and Nationwide have said their data suggest prices edged up again in November, as a lack of supply of properties pushed valuations higher. 

While Rightmove predicted a slow start to 2024, Bannister warned against too much gloom. Asking prices are ending the year just 1.1% below where they were 12 months ago. 

“For now, there appears to be more calm and certainty heading into 2024,” Bannister said. He’s predicting a further 1% fall in asking prices over the next year. 

Average mortgage rates have fallen for 19 consecutive weeks, according to Rightmove, with the average 5-year fixed rate now 5.11% compared to 6.11% in July. This should help attract more family buyers to the market, Bannister said, who had postponed their home moves in the aftermath of Liz Truss’s fiscal program, which caused mortgage rates to rocket. 

©2023 Bloomberg L.P.