Further evidence that Brexit is not yet hitting the UK property market is found in the latest housing index which shows that the annual rate of price growth has increased for the first time in eight months.
Before the referendum on the future of the UK in the European Union in June there were warnings issued by the Chancellor that leaving would trigger a house price crash but the latest figures from lender the Halifax shows that prices were up 0.2% month on month in November and 6% year on year.
The data also shows that this was the third month in a row that prices increased on a monthly basis and in the three months to November 2016 prices were 0.8% higher than in the previous three month period. This takes the average price of a home to £218,002.
The annual rate of price growth had been on a steady downward trend in recent months since reaching a peak of 10% in March. According to Martin Ellis, Halifax housing economist, heightened affordability pressures, resulting from a sustained period of house price growth in excess of earnings rises, appear to have dampened housing demand, contributing to the slowdown in house price inflation rather than Brexit.
‘Very low mortgage rates and an ongoing, and acute, shortage of properties available for sale should help support price levels although annual house price growth may slow over the coming months,’ he said.
Confidence in the UK housing market has fallen to its lowest point in three years but the majority still expect prices to rise, according to the latest Halifax Housing Market Confidence Tracker.
The latest survey, which tracks consumer sentiment on whether house prices will be higher or lower in a year’s time, shows a decline of 14 points from March 2016 but 57% expect the average UK price to be higher in a year’s time with just 15% expecting prices to fall.
However, Rob Weaver, director of investments at property crowdfunding platform Property Partner, believes that the dominant narrative for the housing market is still Brexit related uncertainty even although the last three months have shown steady upward movements.
‘Low borrowing rates, a shortage of properties for sale and the longer term paucity of housing supply across the UK are underpinning prices, proof that the residential property market is able to withstand difficult political and economic conditions,’ he said.
‘Property has always been a long term investment and in the year ahead, according to recent sentiment surveys, the feeling is that house prices will continue to rise,’ he added.
Jonathan Hopper, managing director of Garrington Property Finders, thinks that the Halifax’s market confidence tracker illustrates perfectly the ‘business as usual’ stoicism that can be found in the housing market.
‘We’re seeing that practical approach on the front line too. Many would be buyers who had been weighing up the impact of Brexit on their finances before committing have given up trying to read the runes, and have now morphed into determined buyers,’ he pointed out.
‘Prices are being supported by the acute shortage of supply, but with no interest rate rises on the horizon and an economy that stubbornly refuses to be blown off course, buyer demand is recovering well. With pragmatic sellers often willing to trim asking prices to secure a sale, growing numbers of buyers are deciding that now is the time to act,’ he added.
Mario Berti, chief executive officer of Octopus Property, also believes that Brexit could still have more of an effect next year when the official triggering of Article 50 takes place. ‘Many predicted the worst for the UK housing market in the aftermath of the Brexit vote, but prices so far have been supported by very tight supply, the low cost of borrowing and low unemployment,’ he explained.
‘Next year, demand may be tempered by rising inflation, which would hit consumer sentiment and spending power, as well as uncertainty over the precise nature of Brexit. The result of the Brexit Supreme Court case, due to be announced in January, will be an early test of sentiment,’ he added.
