House prices UK: Property market ‘struggling to weather Brexit storm’

House prices UK: Property market ‘struggling to weather Brexit storm’

While households up and down the country woke up this morning to the coldest day of the winter so far, Nationwide’s latest house price index pointe

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While households up and down the country woke up this morning to the coldest day of the winter so far, Nationwide’s latest house price index pointed to a freeze setting in on house price growth since the new year. The data released today indicates that average annual house price growth slowed to just 0.1 per cent on January, although the month on month performance was slightly better at 0.3 per cent average growth. In real-terms, prices decreased slightly with the average UK property price currently standing at £211,966, a slight decrease from the £212,281 quoted the previous month.

Even though indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, Robert Gardner, Nationwide’s Chief Economist commented that “forward-looking indicators had suggested some softening was likely”.

Robert continued: “It is likely that the recent slowdown is attributable to the impact of the uncertain economic outlook on buyer sentiment, given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs.”

Former RICS residential chairman Jeremy Leaf was pragmatic about today’s report, and suggested that: “Although not showing much change, these figures confirm a market struggling to weather the Brexit storm but not collapsing.

“Looking ahead, there are probably too many potential bumps on the road to give a clear steer as to the future direction of prices and activity but what is apparent is that there remains a determination among a good number of serious buyers and sellers to find a way of moving on.”

Mike Scott, Chief Property Analyst at online estate agent Yopa highlighted that the annual rate of increase in January is the lowest that Nationwide has reported since the post-credit-crunch collapse.

Nonetheless, he was also cautiously optimistic in the property market’s longer-term prospects, noting: “This is likely to be a short-term slowdown due to the current political uncertainty, because the fundamentals of the market are still strong.

“We expect that the market will pick up again later in the year, as long as the Brexit uncertainty can be resolved without damaging the economy.”

So, short term pain but longer-term gain for homeowners and property investors?

Potentially, as Robert Gardner concludes: “The economic outlook remains unusually uncertain.

“However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low single-digit pace in 2019.”

Last week, data from HMRC pointed to the overall performance of the market remaining robust throughout 2018, with the total number of properties sold throughout the year only slightly lower than the previous two years.

The statistics revealed that, on an unadjusted basis, a total of 1,194,980 residential properties were sold in 2018 in the UK which is only slightly lower than 2017, when 1,220,060 homes were sold in the UK, and in 2016 when HMRC recorded 1,235,020 transactions.

As a monthly figure, on an unadjusted basis 103,240 residential properties were sold in the UK in December, a decrease of 11.45 per cent on November when 116,600 homes were purchased.

However, as the weeks leading up to Christmas are generally slightly slower for completions than other points in the year, therefore many in the industry would consider that these numbers would be in the context of normal market movements.

Mike Scott, Chief Property Analyst at online estate agent Yopa, suggested that the outlook for the property market is positive going into 2019.

He said: “The first quarter of 2018 was quite slow, with the bad weather caused by the ‘Beast from the East’ reducing activity in the housing market, and so we expect the year-on-year comparisons to show an increase as we move into 2019.”

Follow Louisa on Twitter:  @louisafletcher 

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