Property prices in the UK fell by 0.9% in January and the annual rate of growth slowed from 6.5% in December to 5.7% in the first month of 2017, the latest index shows.
But prices were 2.4% higher in the last three months from November to January than in the preceding three months, the data from lender the Halifax also shows, taking the average price of a home to £220,260.
According to Martin Ellis, Halifax housing economist, even although annual growth is now well below last March’s peak of 10%, the quarterly and annual rates of house price growth remain robust.
‘UK house prices continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding, and exceptionally low interest rates. These factors are unlikely to change materially during 2017,’ he explained.
‘Nonetheless, weaker economic growth and increasing pressure on spending power, along with affordability constraints, are expected to dampen housing demand, resulting in some downward pressure on annual house price growth during the year,’ he added.
We should not read too much into the January month on month figure, according to Russell Quirk, chief executive of eMoov, who pointed out that January is a slow month in the housing market calendar.
‘These figures demonstrate the robust nature of the UK market, as, despite a turbulent year for property, it has weathered the storm and continues to see upward price growth both annually and when compared to the last quarter,’ he said.
‘January is always a lethargic month for UK property as a result of the Christmas break and so any fall in house prices at this time of year should be taken with a pinch of salt, rather than a handful of panic. Mortgage approvals have continued to increase and demand remains woefully low, so it is likely that come this time next month, prices will be on the up again across the board and this monthly drop will have righted itself,’ he explained.
‘Had any other market around the world been subject to such a sustained period of scaremongering and uncertainty amongst buyer and seller as the UK market has in the last year, I expect it would be a different story to the one we are seeing here,’ he added.
Rob Weaver, director of investments at property crowdfunding platform Property Partner, believes that over the long term the housing market will continue its upward trajectory. ‘Seasoned investors will know that it’s essential to take a long term view on the property market, and monthly or even quarterly fluctuations should not blur the bigger picture,’ he said.
‘Property prices have been remarkably stable even with multiple tax changes and the spectre of Brexit. The harsh reality for those trying to buy is that there’s a critical shortage in supply, which is underpinning the market. Ultra-low interest rates is also helping to stimulate demand from first time buyers or those hoping to move up the ladder,’ he added.
Jonathan Hopper, managing director of Garrington Property Finders, also believes that the market is robust and pointed out that the Bank of England has reported the highest number of mortgage approvals since last March’s stamp duty stampede.
He explained with supply at a low prices are being supported by the lack of choice and this is keeping the quarterly and annual rates of price growth relatively steady. However his firm has found that astute buyers are able to ask for and win big discounts.
‘The result is greater levels of month on month volatility and a sense of caution returning to the market, as rising consumer inflation threatens to drive up the cost of living faster than average wage rises. On this evidence the market is likely to continue its hardwired pattern of price rises in 2017, albeit at a more subdued pace as house price to earnings ratios begin to bite in many parts of the country,’ he added.