House prices in the UK fell by 1.6% in March to an average of £233,181, correcting the rise recorded in February, the latest lender index shows.
But on a quarterly basis they increased by 1.6% and year on year prices are 2.6% above where they were in March 2018, according to the figures from the Halifax index.
Russell Galley, managing director of the Halifax, said that the focus should not be on monthly figures as these can be too volatile to give a true picture of what is happening in the property market.
‘Industry wide figures show that the number of mortgages being approved remains around 40% below pre-financial crisis levels, and we know that lower levels of activity can lead to bigger price movements,’ he explained.
‘The more stable measure of annual house price growth held steady at 2.6% and is still within our expectation for the year. The need to build up a deposit before getting a mortgage is still a challenge for many looking to buy a property,’ he pointed out.
‘However, the combined effect of fewer houses for sale and fewer people looking to buy continues to support prices in the long term. These conflicting challenges, when combined with the ongoing uncertainty around Brexit, have had an impact across the country but most notably in London, meaning that we continue to expect subdued price growth for the time being,’ he added.
According to Sam Mitchell, chief executive officer of online estate agents Housesimple, agreed that it is not helpful to read too much into monthly figures. ‘After average house prices fell 3% in January, and then spiked 6% in February, they’ve dropped off again by almost 2% in March. Uncertainty around Brexit and low stock levels are major contributory factors, as is the impact of a market slowdown in London,’ he said.
‘If you take London out of the equation, we are seeing more normal market conditions in other parts of the country, particularly in the north, with healthy levels of transactions during this early Spring period, when traditionally there’s more activity in the market,’ he added.
Mike Scott, chief property analyst at online estate agent Yopa, believes that restricted supply is propping up prices, with the stock of homes for sale per estate agent reaching its lowest ever level. ‘This means that even with reduced buyer activity there are still not enough homes on the market, and so prices are increasing,’ he said.
‘With affordability still severely constrained, especially in the south of the country, this is unlikely to lead to more significant price rises. However, it does seem that the market has returned to modest house price growth, roughly in line with wage inflation, after slowing down to a standstill in the second half of last year,’ he added.
While a lack of clarity over Brexit decisions may be a cause for concern for some, in general the market is proving its resilience with activity ticking over, according to Jeff Knight, Marketing Director for Foundation Home Loans.
‘First time buyers and those keen for discounted prices in their next move would be wise to snap up purchases sooner rather than later. That said, a dreary supply of properties on both the rental and purchasing side not only continues to fall short of demand but will further inflate prices making affordability even trickier,’ he added.
