UK house prices continued to “tread water” in July as they slipped 0.2 per cent month on month, Halifax warned today.
However, annual growth rose 4.1 per cent thanks to the housing market’s poor performance in 2018, the bank’s latest house price index found.
Russell Galley, managing director of Halifax, said: “The average UK house price fell slightly for a second month, as the market continues to tread water with marginal increases or decreases in each monthly period.
“That said, it’s worth remembering that while economic uncertainty continues to weigh on the market, the overall trend actually remains one of comparative stability, with average prices down by less than £600 over the last three months.
Halifax said a drop off property sales in the early months of summer raises the spectre of a possible downturn.
But Galley added: “New buyer enquiries are up, and favourable mortgage affordability – driven by low interest rates and strong wage growth – should continue to underpin prices for the time being.
“In the longer-term, we believe there is unlikely to be a step change in market activity until buyers and sellers see some form of resolution to the current economic uncertainty.”
Summer slump or Brexit paralysis?
Marc von Grundherr, director of estate agent Benham and Reeves, asked: “Are we seeing a further indictment of Brexit paralysis? Or is this a seasonal blip given that the summer months simply tend to see lower demand?”
He believes the drop was the latter, adding: “For the UK property market to have seen year on year growth of over four per cent despite the best endeavours of our politicians to de-rail public sentiment, has to be viewed as at least resilient – perhaps even astonishing.”
Buyers look ‘beyond Brexit’
Jeremy Leaf, north London estate agent and a former Royal Institution of Chartered Surveyors residential chairman, said the latest figures show buyers are “looking beyond Brexit”.
“Prices are being underpinned by shortage of stock, improving affordability and low mortgage rates,” he added.
“What is more important is the number of transactions, which remain sluggish and protracted as sellers reluctantly come to terms with new market realities.”
Property lender MT Finance said the market is “flat” with house prices continuing to fall, but said the decline was “relatively small”.
“However, there is a risk that come the autumn, the robustness of the property market will be put to the test,” director Joshua Elash added.
“If Brexit or deflationary forces lead to the Bank of England increasing the base rate, there will be consequential pressure on homeowners to sell as they struggle to deal with meeting the cost of increased mortgage payments.
“In this scenario we would expect to see more significant downward pressure on prices.”
By Joe Curtis
Source: City AM