house prices
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Figures recently released by Nationwide indicate that in October, annual house price growth fell to 1.6% from the 2% reported the previous month.

Market watchers suggest that the lower activity for 2018 house prices is partly due to movers waiting to see if any of this year’s Budget include any positive changes for them, such as a reform of Land Tax and Stamp Duty.

It is also possible that buyers and sellers are holding off until more information is available on a Brexit deal before making any major decisions.

Nationwide Chief Economist Robert Gardner said that there was a slowdown in house price growth in October, moving annual growth below the 2 to 3% witnessed over the previous 12 months. He added that this was in line with expectations, as tighter household budgets and economic uncertainty would naturally reduce demand, and he expected to see 2018 house prices go up by around 1% over the course of the year.

Mike Scott, the chief property analyst at Yopa, an online estate agency, said that the October house price index reveals a renewed slowdown and that the number of house sales is well-below their 2007 peak.

He pointed out that the numbers of first-time buyers and cash buyers have resumed their pre-boom levels while the number of buys to let purchases was ascending until 2015 when the tax system put buy-to-let investors at a disadvantage and caused their numbers to fall to around one-third of the 2007 level.

Former RICS residential chairman Jeremy Leaf explained that political and economic uncertainty was causing judgments to become clouded at a time when the UK economy does not appear to be in bad shape.

He said that the good news was that first-time buyers are replacing investors, which is a bonus if sellers appreciate the importance of negotiation.

Brian Murphy, Mortgage Advice Bureau Head of Lending, also saw a mixed outlook. He suggested that ongoing economic and political uncertainty was causing movers in some areas to adopt a ‘wait and see’ attitude, which has made the market more subdued in some areas.

Mr. Murphy added that in regions like Yorkshire and the Humber, the Midlands, Wales, and Scotland, buyer sentiment remains positive and markets continue to perform well. This means that in these regions, property prices have enjoyed greater average yearly increases than the national rate of growth in the headlines.

If a Brexit agreement is finalised by November 21, there will likely be a last-minute rush of activity from homebuyers and sellers as bottled-up demand in some regions may encourage movers to get a purchase or sale confirmed before Christmas, resulting in a late-year market revival.

The Bank of England’s announcement of its intentions to keep interest rates at their present level will likely see lenders continue to make low production rates available in an effort to encourage new mortgage customers and keep existing borrowers in the last months of 2018, resulting in a market upswing. If not, and the current holding pattern continues, November housing market activity could be a disappointment.

Source: CRL

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