The see saw nature of house prices in the UK were shown in the latest index with prices up 0.4% month on month in May, down 0.2% quarter on quarter and up 3.3% year on year.
The data from lender the Halifax also showed that while annual growth is still in positive territory it is down considerably compared to the recent peak of 10% in March 2016.
The slight uptick in May took the average price of a home to £220,706 with the Halifax’s index report indicating that low interest rates and a lack of supply continue to keep the market going.
‘The fact that the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate, is likely to support house price levels over the coming months,’ said Martin Ellis, Halifax housing economist.
While there has been virtually no change in prices in the last three months the data shows that over the medium to long term the housing market is still performing. House prices in May 2017 were 11% above their August 2007 peak. It means that the average house price of £220,706 is £66,043 or 43% higher than its low point of £154,663 in April 2009.
David Hollingworth of L&C Mortgages pointed out that demand from first time buyers remains good and they will have a better chance to build a deposit without prices spiralling out of their reach quicker than they can save.
‘That may also be helped by the reduced level of activity in the buy to let market as landlords get to grips with higher stamp duty charges, reduction in tax relief and tighter lending criteria,’ he added.
However, Jonathan Hopper, managing director of Garrington Property Finders, is concerned about the longer term outlook as he believes that falling real wages are eroding buyer confidence and squeezing affordability.
‘For too long the gap between house price growth and wage growth has been a gulf. This was unsustainable and it was inevitable that prices would ease, especially in the areas where they had been rising fastest,’ he said.
‘But nothing puts the brakes on the housing market more than the sense that prices may ease in future. Would be buyers are quick to sit on their hands if they think waiting could save them money,’ he explained.
He hopes that there will be a positive outcome from this week’s general election. ‘If Friday morning brings a clear result there’s a good chance the market will ease past its current speed bump. Clarity is what is needed to free up more supply and spur discretionary buyers back into action,’ he added.
The up and down nature of the market reflects the turbulent landscape that both the UK property market and the wider economy have had to traverse over the last year or so, according to Russell Quirk, chief executive of online estate agents eMoov.
He too believes that the outcome of the election is important. ‘The recent cooling of price growth seems to be thawing and it is no coincidence that one of the overarching factors in the recent price growth slowdown has been a shortage of stock, more so than usual. Regardless of which way the election goes, it is likely that the housing sector will receive a boost from the many home sellers and buyers, who until now, have been putting their decision on hold until the election dust has settled,’ he added.
Alex Gosling, chief executive officer of online estate agents HouseSimple, pointed out that a hung parliament is the last thing the housing market needs. ‘But this is not a property market in crisis, it’s just that we’re so used to seeing prices rise relentlessly every month. It’s likely growth will be low single digits this year, but the buyers and sellers are still out there,’ he said.
‘Demand hasn’t fallen away, although buyers are spending more time looking before committing to a purchase. And the continued supply shortage is still supporting prices,’ he added.
