Annual house price growth under 1% for 11th month in a row
Annual house price growth in the UK remained subdued in October at just 0.4% while month on month values increased 0.3%, taking the average price of a home to £215,358.
The latest index data from lender the Nationwide also shows that annual growth has been below 1% for 11 months in a row.
It means that Average prices rose by around £800 over the last 12 months, a significant slowing compared with recent years, for example, in the same period to October 2016, prices increased by £9,100.
“Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensifying of Brexit uncertainty, said Robert Gardner, Nationwide’s chief economist.
He pointed out that the underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years.
‘If Brexit uncertainty lifts in the months ahead, hiring is likely to recover, although there may be some upward pressure on mortgage rates as investors once again contemplate the potential for UK rate increases in the years ahead. However, in the near term such increases are likely to be capped by trends in global financial markets,’ he explained.
‘Weak global economic prospects continue to exert downward pressure on long term interest rates around the world, including the UK. Moreover, mortgage rates remain close to all-time lows and more than 95% of borrowers have opted for fixed rate deals in recent quarters, around half of which have opted to fix for five years,’ he added.
The house price index demonstrates that despite Brexit uncertainty, demand for real estate remains, according to Jamie Johnson, chief executive officer of FJP Investment. ‘Yes, the rate of house price growth has slowed down, but the fact that prices are rising at a time when the government is amidst a political crisis should not be overlooked. The question now is whether this upturn is a sign of things to come,’ he said.
He also pointed out that the property market faces some challenging months ahead, made more complicated by the fact that Brexit has been delayed again. ‘Despite the uncertainty, it is important to remember the bigger picture. Whilst it is natural in times of uncertainty for property prices to fluctuate, bricks and mortar has remained, for the most part, resilient,’ he explained.
‘Figures from the Office of National Statistics, for instance, show that the average UK house price has risen from £214,000 in June 2016, to £228,000 in January 2019, impressive growth for any asset. The property market has weathered many storms before, including the global financial crisis, snap general elections and high profile political resignations, and there is no reason to believe this won’t be the case in the months leading up to Brexit,’ he added.
According to Paresh Raja, chief executive officer of Market Financial Solutions, the figures should not distract from the bigger picture. ‘In real terms, house prices have risen since the EU referendum vote, which is an impressive feat given the performance of other assets that have struggled as a consequence of Brexit uncertainty,’ he said.
‘Buyers and sellers are no doubt suffering from Brexit fatigue, and this marginal increase/decrease will no doubt be replicated over the coming months as we wait for Brexit to be resolved. Once certainty returns to the market, I’d expect to see a boost in transactions as buyers and sellers are able to effectively plan for the future without Brexit uncertainty hanging over them,’ he added.
Tomer Aboody, director of property lender MT Finance, believes that the market will remain in this state of paralysis, owing to the uncertain nature of what is coming that it is impacting the economy as a whole.
‘It is possible that there will be an improvement in the housing market in the final quarter of the year but that will be purely seasonal. It’s time Parliament listened to the people and stop playing games,’ said Aboody.
Kindly shared by PropertyWire