House prices in the UK fell by 1.4% in November and at an average of £224,578 are just 0.3% above where they were a year ago, the latest lender index shows.
The data from the Halifax also shows that on a quarterly basis house prices fell by 1.1% with the market now seeing its lowest rate of growth in six years.
But Russell Galley, Halifax managing director, pointed out that annual price growth is still positive and within the 0% to 3% rate it had forecast for 2018.
‘High employment, wage growth and historically low mortgage rates continue to make home ownership more affordable for many, though the need to raise a significant deposit still acts as something of a restraint on the market,’ he said.
‘This is largely offset by relatively limited supply of new and existing properties for sale, which continues to sustain house prices nationally,’ he added.
According to Andy Soloman, while there may be a seasonable aspect to the slowdown in price growth, further complications are likely to arise before a deal is reached on Brexit and the market is likely to remain erratic heading into 2019 as uncertainty remains.
‘This year has been one of the toughest in recent times and we’ve seen some casualties as a result, but there is still a pulse running through the UK market despite many predictions that it would flat line,’ he said.
‘An uplift in buyer demand, strengthening levels of property transactions and the continued affordability of mortgage products in recent months has helped bolster signs of life and this does, at least, bode well for the year ahead,’ he added.
Gary Barker, chief executive officer of proptech company Reapit, believes that with Brexit looming the figures should not be a surprise. ‘The fall from 1.5% growth to only 0.3% correlates with our data showing that withdrawals are outpacing sales for the first time since May 2016, as we expect to see when prices are weak,’ he said.
‘As we head into 2019, we predict a continuation of this subdued performance, as long as the economic and political status quo remains unchanged. Transactions have been flat for the past three years, and caution is likely to remain whilst Brexit remains unfinished,’ he pointed out.
‘Furthermore, if Brexit stalls, or more significant uncertainty over the Government develops, it will be a painful road ahead. However, there is room for optimism in this scenario as we are seeing house price reduction in some areas, which could make property more affordable and also boost the economy by increasing spending power and buying capacity,’ he explained.
‘If the Brexit deal passes through Parliament, we could potentially see a much more confident market, resulting in more transactions, fewer withdrawals, and increased prices. Although transactions may reduce significantly, with depressed prices discouraging sellers from listing their properties, low prices will put buyers back in control. First time buyers, in particular, could benefit from slashed prices,’ he added.
Dilpreet Bhagrath, of online mortgage broker Trussle, believes that the market will not pick up until there is more clarity around Brexit. ‘There’s also a huge amount of discussion about a looming interest rate rise, which will be putting up-sizers off moving as they’ll be more wary of taking on more debt,’ she said.
‘This period of slowdown does offer a window for aspiring first time buyers who already have a deposit saved up. House price growth is the lowest it’s been for several years and since the recent Budget, more can now take advantage of stamp duty allowances for shared ownership homes. Anyone in this position must make sure they get the best possible mortgage deal based on its true cost rather than just the cheapest headline interest rate,’ she added.
