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UK house prices slip by 0.5% as ‘peak buyer demand likely to have passed’

The average UK house prices slipped by 0.5% in June as the full stamp duty holiday came to an end, according to an index.

It marked the first monthly fall since January, indicating that the peak of buyer demand is now likely to have passed, according to the research from Halifax

But typical property values were still more than £21,000 higher than a year earlier, the bank said.

The price drop in June meant annual house price inflation eased back slightly from May’s 14-year high of 9.6% to 8.8%.

Across the UK, the average house price in June was £260,358.

The stamp duty holiday in England and Northern Ireland is now being tapered, before being phased out completely in the autumn.

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The “nil rate” stamp duty band shrank from £500,000 to £250,000 from July 1, prompting a rush of buyers trying to beat the deadline, and it will revert to its normal level of £125,000 from October 1.

Russell Galley, managing director, Halifax said: “With the stamp duty holiday now being phased out, it was predicted the market might start to lose some steam entering the latter half of the year, and it’s unlikely that those with mortgages approved in the early months of summer expected to benefit from the maximum tax break, given the time needed to complete transactions.

“That said, with the tapered approach, those purchasing at the current average price of £260,358 would still only pay about £500 in stamp duty at today’s rates, increasing to around £3,000 when things return to normal from the start of October.

“Government support measures over the last year have helped to boost demand, particularly amongst buyers searching for larger family homes at the upper end of the market.

“Indeed, the average price of a detached home has risen faster than any other property type over the past 12 months, up by more than 10% or almost £47,000 in cash terms.

“At a cost of over half a million pounds, they are now £200,000 more expensive than the typical semi-detached house.

“That power of home-movers to drive the market, as people look to find properties with more space, spurred on by increased time spent at home during the pandemic, won’t fade entirely as the economy recovers.

“Coupled with buyers chasing the relatively small number of available properties, and continued low borrowing rates, it’s a trend which can sustain high average prices for some time to come.”

Looking across the UK, Halifax said Wales (12.0%) continues to lead the way for annual house price growth, registering its strongest performance since April 2005.

Northern Ireland (11.5%), the North West (11.5%), Yorkshire and Humberside (10.9%) and Scotland (10.4%) also registered double-digit gains.

For Northern Ireland and Scotland, the annual price rises were the highest recorded since late 2007, while for the North West and Yorkshire, price inflation was the strongest since early 2005, the report said.

At the other end of the scale, the South of England continues to lag somewhat, with eastern England and the South East recording price inflation rates of around 7%, Halifax said.

In London, property values were up by just 2.9% year on year, with several unique factors weighing on the market there, the report added.

Mr Gardner said of UK house prices generally: “We would still expect annual growth to have slowed somewhat more by the end of the year, with unemployment expected to edge higher as job support measures unwind, and the peak of buyer demand now likely to have passed.”

Tomer Aboody, director of property lender MT Finance, said: “Even though property price increases in London have been less stellar than elsewhere, prices are still at their highest in the capital and continue to rise, putting property ownership further beyond the reach of first-time buyers in particular.”

Anna Clare Harper, chief executive of property consultancy SPI Capital, said: “The tapering down of the temporary stamp duty reduction takes the pressure off demand.

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“However, supply is still constrained, construction is getting harder and more expensive, and a mass sell-off from property owners is unlikely in the absence of significant interest rate rises.”

Mark Harris chief executive of mortgage broker SPF Private Clients, said: “Cheap borrowing and affordability will continue to give buyers more purchase power, and result in continued demand, even if the peak of the market has passed.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics) said: “We don’t expect this new balance between supply and demand to change much over the next few months, particularly if economic growth can make up for the ending of the furlough scheme.”

Here are average house prices and the annual increase across the UK, according to Halifax:

– East Midlands, £214,542, 8.6%

– Eastern England, £303,834, 7.6%

– London, £511,234, 2.9%

– North East, £152,989, 9.2%

– North West, £201,836, 11.5%

– Northern Ireland, £163,484, 11.5%

– Scotland, £183,359, 10.4%

– South East, £353,618, 7.3%

– South West, £269,142, 9.8%

– Wales, £192,507, 12.0%

– West Midlands, £221,661, 8.1%

– Yorkshire and Humber, £185,229, 10.9%

By Vicky Shaw

Source: Independent

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House price inflation reaches strongest point in seven years

Annual house price inflation is now at its strongest level in nearly seven years, according to the Halifax House Price Index.

The average UK property price has reached £261,743, a new record high.

On an annual basis, house prices have risen by 9.5%, on a quarterly basis they are up 2.4%, and month-on-month, prices have increased by 1.3%.

All UK regions, bar the North East, saw an acceleration in year-on-year house price inflation last month.

The strongest growth was once again recorded in Wales, up 11.9% annually, closely followed by the North West and Yorkshire & Humber, both of which posted double-digit annual growth.

For Wales and the North West, these are the biggest percentage gains since April 2005, and for Yorkshire & Humber since June 2006.

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The South of England, however, traditionally the driving force of national house price performance, is lagging behind the rest of the country; this is especially the case in Greater London, where average prices are still 3.1% higher than a year ago but growing more slowly than the rest of the country.

Russell Galley, managing director of Halifax, said: “House prices reached another record high in May, with the average property adding more than £3,000 (1.3%) to its value in the last month alone.

“A year on from the first easing of national lockdown restrictions, and the gradual reopening of the housing market, annual growth surged to 9.5%, meaning the average UK home has increased in value by more than £22,000 over the past 12 months.

“Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates.

“For some homebuyers, lockdown restrictions have also resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher.

“Whilst these effects will be temporary, the current strength in house prices also points to a deeper and long-lasting change as buyer preferences shift in anticipation of new, post-pandemic lifestyles – as greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing.

“These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale.”

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Mark Harris, chief executive of SPF Private Clients, added: “House price growth in the south of England may be lagging behind the rest of the country but property prices are still more expensive there than elsewhere.
“While buyers are prepared to go further in the search for more space and less need to be in the office every day, pushing up demand for property away from the capital, it remains to be seen whether this is a long-term trend or whether the attraction of city centres will return at some point.
“Cheap borrowing and affordability is giving buyers more purchase power, which is pushing up prices.
“Lenders remain keen to lend and have plenty of cash to do so, resulting in ever-lower mortgage rates from sub-1%.
“However, lenders aren’t only targeting those with big deposits or similar levels of equity in their homes, with options also increasing for first-time buyers at 95% loan-to-value and the first properties being sold under the government’s First Homes initiative.
“This is just as well given that rising property prices are not good news for first-time buyers, and will make getting on the housing ladder even more of a struggle.”
Sundeep Patel, director of sales at Together, said: “The surge in demand for property we’re continuing to see showed no indication of slowing last month.

“House prices reached another record high in May, up by 1.3% (more than £3,000) in value than in April. Annual growth also surged by 9.5%, with the average house price in the UK now at £261,743.

“However, with the stamp duty tax break starting to taper off from the end of this month, we’re likely to see this unprecedented rush for new homes ease off by the time we hit the end of summer.

“The recently released travel traffic light list for UK holidaymakers may also dampen activity as people prepare to make a break for guaranteed sun and so stick a pin in their property plans back home.

“How the property market will shape up by the end of this year is no way near certain.

“However, whether house prices have been artificially inflated or not, it is possible the backlog in demand from keen buyers will markedly increase opportunities for specialist lenders, as increased volumes of borrowers turn to finance such as bridging loans to quickly purchase their ideal homes.”

Anna Clare Harper, chief executive of SPI Capital, added: “Investors and homeowners alike are wondering whether the housing market boom is about to bust?
“With 9.5% house price growth in the year to May, despite the huge economic problems caused by the pandemic, it’s a sensible question.
“The truth is, what tends to happen in the housing market is different from what happens with other purchases and investments.
“In other sectors, when consumers get nervous, they stop spending so much. When investors get nervous, they are scared into selling.
“Things are different in the housing market because homes are ‘essential’. We all need a place to call home.
“So, unlike crypto ‘investments’ or shares, people tend not to sell unless they really need to. And, with interest rates low and forecast to remain so, it can be cheaper to pay a mortgage on an equivalent property than to pay rent.
“So a mass sell-off from property owners who have already managed to put down a deposit seems unlikely unless interest rates rise significantly.
“According to Halifax, average annual house prices are at an historic high, at £261,743, which will seem unaffordable to many – in particular younger people.
“A big cause of growth over the past year has been the desire for more space – and for those not moving, home renovations are increasingly popular.
“This is symbolic of our rising living standards which is, on the whole, a good thing. As a result, house prices and construction costs rising.
“This means, in turn, that the cost of renting, buying and improving homes are likely to continue to rise.”

By Jake Carter

Source: Mortgage Introducer

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Welsh house prices exceed £200,000

The average house price in Wales has topped £200,000 for the first time – now standing at £209,723, Principality Building Society’s Wales House Price Index for Q4 2020 has found.

Last year showed the strongest annual house price inflation in 15 years (8.2%).

Detached home prices were 11% higher than a year ago, as people search for space prompted by the pandemic.

This is compared with 5-6% growth for most other property types.

Tom Denman, chief financial officer at Principality Building Society, said: “The strength of the housing recovery in the second half of 2020 is striking, and this reflects both the stimulus provided by the Welsh government in terms of the time-limited Land Transaction Tax holiday, the pent-up demand which built up during the first lockdown, and the race for space to buy bigger properties with larger gardens.

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“In Q4, all local authority areas were reporting house prices higher than a year earlier. This increased demand has been driven by increased savings in many households during the lockdowns coupled with continued historic low mortgage rates. There has probably been some additional demand from buyers across the border with England, with house prices more affordable in Wales in relative terms.

“The recent UK HM Treasury review of independent forecasts for 2021 showed wide divergences in house price expectations for the year. With so many unknowns it is impossible to offer a forecast with any reasonable accuracy. However, once there is more clarity on the containment of the virus and on the full re-opening of the economy, it will become easier.”

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Merthyr Tydfil recorded the strongest rise on a quarterly basis of 18.2%, taking its average house price to £147,687, though this may have been exaggerated due to a modest amount of sales data.

In north Wales, Anglesey house prices rose by 16% annually to £237,782, while Conwy (£224,068) and Flintshire (£216,224) rose by 13.7% and 13.3% respectively.

In south Wales, Monmouthshire (£332,558) and Newport (£222,107) also achieved strong annual double-digit increases, rising 14.2% and 12.1% respectively.

BY RYAN BEMBRIDGE

Source: Property Wire

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House price inflation surges to 7.5% in October

House prices rose by 7.5% year-on-year in October due to strong demand for higher value homes, Halifax’s House Price Index has found.

Quarterly prices increased by a substantial 4.0%, bringing the average price to £250,457 across the UK.

However, month-on-month price growth slowed considerably, down to 0.3% compared to 1.5% in September.

Russell Galley, managing director, Halifax, said: “Overall we saw a broad continuation of recent trends with the market still predominantly being driven by home-mover demand for larger houses.

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“Since March flat prices are up by 2.0% compared to a 6.0% increase for a typical detached property. In cash terms that equates to a £2,883 increase for flats compared to a £27,371 rise for detached houses.

“This level of price inflation is underpinned by unusually high levels of demand, with latest industry figures showing home-buyer mortgage approvals at their highest level since 2007, as transaction levels continue to be supercharged by pent-up demand as a result of the spring/summer lockdown, as well as the Chancellor’s waiver on stamp duty for properties up to £500,000.

“While government support measures have undoubtedly helped to delay the expected downturn in the housing market, they will not continue indefinitely and, as we move through autumn and into winter, the macroeconomic landscape in the UK remains highly uncertain.

“Though the renewed lockdown is set to be less restrictive than earlier this year, it bears out that the country’s struggle with COVID-19 is far from over.

“With a number of clear headwinds facing the housing market, we expect to see greater downward pressure on house prices as we move into 2021.”

Jamie Johnson, chief executive of FJP Investment, said: “The property market is moving from strength to strength. Amidst the uncertainty, buyer demand for bricks and mortar is pushing prices to record highs.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“Yet with the country now in a second lockdown, is this momentum about to suddenly run out? I don’t believe so. After all, the stamp duty holiday is still in play and the government has confirmed buyers and renters can still move houses throughout November. Clearly, it understands the importance of the property market in supporting the economy.

“I anticipate the rate of house price growth to slow down in November, however it will no doubt continue to remain in positive territory. People are clearly looking to invest in safe and secure assets during in this uncertain climate, and real estate has a proven track record of being resilient and quickly recovering from period of market volatility.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Halifax: UK housing market outlook for 2020

According to the Halifax, the housing market performed in line with expectations over the past year, at the lower end of its 2% to 4% growth forecast.

Prospects for 2020 look brighter but house price inflation is expected to remain relatively weak, at between 1% and 3%.

A shortage of homes for sale, low levels of house building and challenges facing first-time buyers will continue to support high prices and constrain demand in the short-term

Russell Galley, managing director at Halifax, commented: “The housing market in 2019 followed a similar path to recent years. Modest price growth was supported by falling mortgage rates and a low volume of houses for sale, factors which can in part be attributed to elevated uncertainty. This helped to underpin a degree of resilience in the market.

“Prospects for 2020 look a bit brighter, with uncertainty in the economy falling back somewhat, transactions volumes anticipated to pick up and further price increases made possible by growth in households’ real incomes. However the shortage of homes for sale and low levels of house building will continue to support high prices, while the challenges faced by prospective buyers in raising the necessary deposits may continue to constrain demand.

“As a result, our forecast for house price growth in 2020 is in the range of 1% to 3%, consistent with the pattern of weaker growth seen since 2017.

“Longer-term, a renewed focus on housing policy and increased infrastructure investment aimed outside the South East, for example, could help rebalance regional house prices. However, it’s important to note that any policy changes would be unlikely to impact the market in 2020.

“Although prices will be supported in the near-term by insufficient new building and low interest rates, a sustained period of price growth below income growth as a result of policy action would help to address first-time buyer difficulties.”

By Joanne Atkin

Source: Mortgage Finance Gazette

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House price growth turns negative over the month – but just remains positive year-to-year

House price growth –just – crept into reverse last month. However, annual house price inflation – just – remained in positive territory.

According to Nationwide the average house price was £216,352, down just 0.2% from an average of £216,096 in August.

Annual house price inflation was up by the same amount, 0.2%.

September was the tenth month in a row where Nationwide has recorded annual house price growth of under 1%.

London was the weakest performing region in the third quarter of this year, Nationwide also reported, with prices down 1.7% compared with the same period a year ago.

The lender said that UK house prices are now “only” around 17% higher than their 2007 peak.

Mike Scott, of Yopa, said: “It now seems likely that year-on-year house price growth will dip into negative territory in the last quarter of this year as the Brxit uncertainty continues to subdue market activity.”

Separately, the latest Bank of England lending figures show that in August there were 65,000 mortgage approvals for house purchase, down from the 18-month high of 67,000 in July.

By ROSALIND RENSHAW

Source: Property Industry Eye

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House prices up but region is still popular

The West Midlands is predicted to see the highest house price inflation over the next two years of all UK regions, behind only Wales.

PwC’s latest UK Economic Outlook projects the region will see average house price growth of 3.4 per cent in 2019 and 4.2 per cent in 2020, compared to the UK average of 1.2 per cent and 2.1 per cent.

The average house price in the West Midlands is estimated to rise from £194,000 in 2018 to around £223,000 by 2022, according to PwC’s projections.

This comes at a time when the cost of private renting is proving to be a significant challenge for tenants, with those working in certain key public sector professions increasingly unable to afford rent.

PwC’s report warns that this will potentially lead to a shortage of employees, such as NHS workers, teachers and police officers in these regions, impeding both economic and social mobility.

Using the conventional benchmark that renting must cost less than 30 per cent of gross annual income for it to be considered affordable, the report finds an employee would need an annual salary of £23,800 to afford the median private rent in the UK, up £400 from 2017/18.

This means that the country’s median private rent has just crossed over the 30 per cent rental affordability threshold.

Currently, workers in the West Midlands between 22 and 29 years of age are spending 27 per cent of their monthly earnings on rent, just below the 30 per cent threshold generally considered affordable.

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Matthew Hammond, Midlands region chairman for PwC, said: “House price inflation in the 12 months to April 2019 was strong in both the East and West Midlands at 2.9 per cent and 2.2 per cent respectively.

“The Midlands was in the top five of the UK regions for the underlying house price growth. Growth rates are forecast to continue strongly through 2019 and 2020 at between 3.1 per cent and 4.1 per cent, with the medium term average for 2021 and 2022 settling at the lower end of this range at 3.2 per cent.

“Whilst average house prices are higher across London, the South East and South West, by 2022, if the growth is as forecast, average house prices will break through the £200,000 threshold, reaching £223,000 in the West Midlands and £214,000 in the East Midlands by 2022.

“By comparison the average London house price could reach £508,000 by 2022 and £344,000 across the South East, making affordability of rented property a disproportionate cost of almost 40 per cent of the median salary for 22-29 year olds in the South East and more than 50 per cent in London.

“Affordability remains key in rented segments of the market. In the Midlands with its young population in major cities, for our 22-29 year olds, rental costs are estimated to account for between 23 per cent and 27 per cent of median salary.

“The relative affordability compared with London and the South East, alongside growth across key strategic sectors of the economy, is driving the increasingly popular choice of locating and developing careers across the Midlands. Medium and longer term infrastructure investment is creating conditions for good growth for the Midlands’ cities, fuelling investment.”

By James Pugh

Source: Shropshire Star

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House price growth slows to six-year low

House price inflation slowed to 2.5 per cent during December, according to the Office for National Statistics.

This was the lowest annual rate of house price inflation since July 2013 and continued the slowdown seen in the housing market over the past two years.

The average UK house price was £231,000 in December 2018 – £6,000 higher than a year previously.

On a month-on-month basis, house prices only rose by 0.2 per cent between November and December.

Dilpreet Bhagrath, mortgage expert at Trussle, said: “Even with the slight increase in prices, it’s clear that Brexit nerves and uncertainty is still affecting the market. Not to mention the ongoing lack of supply, with more risk-adverse sellers staying put until the economic picture becomes clearer.

“That said, for new buyers, the current low interest rate climate coupled with the government’s commitment and extension of the help-to-buy scheme will offer further support for those hoping to get a foot on the ladder.

“For the slightly more cautious first-time buyers, opting for fixed rate mortgage deals might be favourable, giving complete clarity over how much your mortgage costs each month so that you can plan ahead.”

Steve Seal, director of sales and marketing at Bluestone Mortgages, added: “Slower house price growth is no doubt a reflection of potential buyers choosing to adopt a ‘wait and see’ approach before committing to the biggest purchase of their life – a home.

“To tackle this, lenders are offering near record low deals to reassure borrowers that there is still plenty of opportunity to lend.”

The lowest annual growth was in the North East, where prices fell by 1 per cent over the year to December 2018, followed by London where prices fell 0.6 per cent over the year.

House prices in London have now fallen from a peak of £488,527 in July 2017 to £473,822 in December.

Meanwhile house price growth was strongest in Northern Ireland, where prices increased by 5.5 per cent, and Wales, where house prices increased by 5.2 per cent.

The ONS said the increase in house prices in Wales was driven by strong growth in the south east of the nation, likely linked to the abolition of tolls on the Severn Bridge.

Despite the strong house price growth in Northern Ireland, it remains the cheapest area of the UK for property, with the average home costing £136,669 compared to £247,886 in England.

Source: FT Adviser

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House price inflation slows to 2.7% across UK cities

House price growth across UK cities has reduced steadily across 2018 and currently stands at +2.7% when comparing December 2018 with December 2017, Zoopla’s UK Cities House Price Index has found.

The slowdown has been driven by price falls in London (-0.2%) and Cambridge, which has seen prices drop 3.8% annually while the rate of growth has slowed across Southern cities.

Richard Donnell, research and insight director at Zoopla, said: “Weaker growth in London, Cambridge and Aberdeen has been a large drag on the headline rate of house price growth across the UK cities index over the last year.

“House prices in London have been falling for almost 12 months while the rate of growth has slowed across cities in southern England, a result of growing affordability pressures, higher transaction costs and increased uncertainty.

“The strongest performing cities are outside south eastern England where affordability remains attractive and employment levels are rising.

“We expect current trends in price growth to continue across the rest of this year, with prices rising in line with earnings for much of the UK but lower growth and some house prices falls in London and the South.

“London will continue to register price falls, concentrated in inner London where prices have grown the most over the last decade. Prices continue to increase slowly in the more affordable outer and commuter areas of London.”

Northern, Midlands, Scottish and Welsh cities all lead the way for annual growth with Edinburgh’s average price up 6.8% annually; Liverpool up 6.3% and Birmingham, Nottingham and Cardiff all seeing prices increase by 5.9%.

There’s a clear North-South divide when it comes to house price growth. The 13 cities in its ‘20 cities index’ posting the highest growth are all located in the North, Scotland, the Midlands or Wales with Bristol in the South West the exception.

Other than Aberdeen, where the housing market has suffered due to oil prices, the ‘bottom seven’ cities are all in the South or East of England.

Some 10 cities have posted double digit growth since the 2016 vote, with Birmingham (pictured) (+16%) and Manchester (+15%) leading the charge.

In a reversal of fortunes, leaders in the broad recovery phase (London, Oxford and Cambridge) are now amongst the very poorest market performers post-Brexit vote.

Southern cities that outperformed during the broad recovery phase are now experiencing significantly decelerated growth, as economic and political uncertainty is more acutely felt here.

Source: Mortgage Introducer

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Average house prices still growing but at the lowest annual rate for six years

Annual house price inflation has fallen to its lowest rate for six years, Halifax has revealed.

The November Halifax House Price Index revealed that house prices grew just 0.3% annually, the slowest rate since December 2012 and down from 1.5% in October.

Prices also declined on a monthly basis by 1.4%, leaving the average at £224,578.

Russell Galley, managing director at Halifax, said: “While this is the lowest rate of growth in six years, it remains within our forecast range of 0% to 3% for 2018.

“High employment, wage growth and historically low mortgage rates continue to make home ownership more affordable for many, though the need to raise a significant deposit still acts as something of a restraint on the market.

“This is largely offset by relatively limited supply of new and existing properties for sale, which continues to sustain house prices nationally.”

Commenting on the figures, Sam Mitchell, chief executive of online agent Housesimple, said: “On first glance, these figures might set alarm bells ringing, but we need to put them into context before manning the panic stations.

“There’s an unprecedented level of political turbulence battering the country at the moment and that is inevitably feeding through to house prices.

“We didn’t see the traditional autumn bounce in transaction levels this year, but after a subdued summer and three months of Brexit wranglings, it was probably more hope than expectation that the housing market would just power through.

“All things considered, the property market is actually holding up incredibly well in extremely testing times. And there are areas of the country, such as the north-west and Yorkshire, which seemed to have brushed off Brexit fears.

“Transaction levels have been surprisingly strong and some impressive prices are being achieved, many close to asking price.

“While the affordability problem has caught up with the housing market in the south, the north is enjoying a mini boom thanks to cheaper property stock and a strong jobs market.

“Looking forward, a lot of buyers have probably decided early to wait until the New Year before making any decisions about purchasing so December is likely to be quiet. But that could all change depending on Brexit this week.”

Source: Property Industry Eye