Property prices in the UK fell by 3.1% in April compared with March and were also down on a quarterly basis by 0.1%, the latest lender index shows.
It mean that annual growth is now 2.2%, taking the average price of a home to £220,962, according to the figures from the Halifax. The lender is now forecasting that prices could be flat in 2018, with the best case scenario a rise of 3%.
The index reveals the volatility in the housing market at present. Although one month’s data is not a trend, the fact that the quarterly trend is down marginally and annual growth is still slowing suggests there will no traditional spring bounce this year, according to commentators.
Russell Galley, managing director of the Halifax, pointed out that annual house price growth fell from 2.7% in March and both the quarterly and annual rates have fallen since reaching a recent peak last autumn.
‘Housing demand has softened in the early months of 2018, with both mortgage approvals and completed home sales edging down. Housing supply, as measured by the stock of homes for sale and new instructions, is also still very low,’ he said.
‘However, the UK labour market is performing strongly with unemployment continuing to fall and wage growth finally picking up. These factors should help to ease pressure on household finances and as a result we expect annual price growth will remain in our forecast range 0% to 3% this year,’ he added.
The continued lack of variety in the current UK housing stock is resulting in some fairly erratic movements where monthly price growth is concerned, according to Russell Quirk, chief executive officer of Emoov.
‘We are seeing waves of buyer demand ebb and flow and in a market with restricted stock, the result is inconsistent movements in house price growth. Yet another new appointment to the Secretary of State for Housing, Communities and Local Government will do little to inspire confidence in the market, however, the rather predictable shortfall of affordable housing being built by the Government should continue to stimulate property prices in the medium to long term,’ he explained.
Some in the industry believe that there is a lack of confidence in the housing market at present. According to Jonathan Hopper, managing director of Garrington Property Finders, sellers are having to re-adjust to unrealistic asking prices and he has found that currently the new homes coming onto the market are much more sensibly priced.
‘Confidence remains in limited supply. The Halifax’s data suggests confidence is now at a five year low, and on the front line we’re seeing buyers are invariably unhurried and acutely price sensitive,’ he pointed out.
‘Despite the shortage of homes for sale, most buyers won’t hesitate to walk away from a property they feel is overpriced. Deals are being done on the right homes at the right price, but in this environment no-one should expect a rapid acceleration in prices in all but the most undervalued areas. This meandering pattern is likely to continue, barring any unforeseen shock. In many ways this is what the market needs, as a sustained period of prices holding firm should foster the return of confidence and help prevent a more serious correction,’ he added.
Jeff Knight, director of marketing at Foundation Home Loans, also points the finger at ambitious sellers at a time when buyers are cautious. ‘Uncertainty remains an area of concern for both sides. With the latest Cabinet reshuffle and appointment of James Brokenshire adding to political wariness for some, it’s clear that solutions laid out in the housing white paper need proper address to resolve any anxieties,’ he said.
‘That said, there continues to be no shortage of demand from property hunters maintaining high levels of activity, so making sure ample choice and high quality homes are available to those looking to rent or buy is key as we edge closer to the summer season,’ he added.
