"This is frustrating news for anyone looking to buy anytime soon as it’ll will make affording that first step onto the housing ladder even harder"
The latest data from Halifax has revealed that between December 2016 and January 2017 average house prices across the UK fell by 0.9%. This is the first monthly fall since prices dropped by 0.3% in August 2016.
According to the report, annual house price growth in the three months to January eased to 5.7% from 6.5% in December. The annual rate is now well below the 10.0% peak reached in March 2016.
Martin Ellis, Halifax housing economist, commented: “House prices in the three months to January were 2.4% higher than in the previous quarter; marginally down on 2.5% in December. The annual rate of growth eased to 5.7% from December’s 6.5%, and is well below last March’s peak of 10.0%.
The quarterly and annual rates of house price growth remain robust even though they are lower than in spring 2016. UK house prices continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding, and exceptionally low interest rates.
These factors are unlikely to change materially during 2017. Nonetheless, weaker economic growth and increasing pressure on spending power, along with affordability constraints, are expected to dampen housing demand, resulting in some downward pressure on annual house price growth during the year.”
Hannah Maundrell, Editor in Chief of money.co.uk said: “This is frustrating news for anyone looking to buy anytime soon as it’ll will make affording that first step onto the housing ladder even harder. Usually you can rely on house prices slowing down in the winter months but this doesn’t seem to be the case, even with the Brexit backdrop.
At the moment trying to buy your first place can feel like you’re banging your head against a brick wall – just not one you actually can afford to own. There is hope that an influx of ex-buy to let properties could flood onto the market in spring as the landlord tax crackdown takes effect. Whether or not this will help the situation remains to be seen.
Anyone trying to buy should focus on sorting out their finances to show they can cover mortgage payments, getting a deposit sorted and searching for properties in up and coming areas where your cash will go further.”
Ian Thomas, CIO and co-founder of LendInvest, commented: "Figures from Halifax in January indicated higher than expected house price growth as constrained housing supply maintained buoyancy in prices. While there will be growth in prices this year, measures in the government's housing white paper announced today will tackle the gridlock in supply and will ultimately determine the scale of price growth."
Russell Quirk, founder and CEO of eMoov.co.uk, had this to say: "There are those that will, of course, see this marginal monthly drop in house prices as a fulfilment of the Armageddon style prophecies that have plagued the UK market since the start of last year, with many widely predicting a troublesome year ahead for property.
But these figures demonstrate the robust, Teflon style nature of the UK market, as, despite a turbulent year for property, it has weathered the storm and continues to see upward price growth both annually and when compared to the last quarter.
January is always a lethargic month for UK property as a result of the Christmas break and so any fall in house prices at this time of year should be taken with a pinch of salt, rather than a handful of panic.
Mortgage approvals have continued to increase and demand remains woefully low, so it is likely that come this time next month, prices will be on the up again across the board and this monthly drop will have righted itself.
Had any other market around the world been subject to such a sustained period of scaremongering and uncertainty amongst buyer and seller as the UK market has in the last year, I expect it would be a different story to the one we are seeing here."
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘Mortgage rates remain low and continue to support activity in the housing market. As a brokerage, we worked with more than 90 mortgage lenders in the past 12 months, all of which are keen to do more lending this year and this is being reflected in low rates and/or the easing of criteria. If buyers can find a property they wish to purchase, then this really is a good time to secure mortgage finance
Jeremy Leaf, former RICS residential chairman, said: "The Halifax figures are interesting from the monthly as well as the quarterly perspective as they show a broadly slowing market in response not just to seasonal but other factors, which we have also noticed in our offices. Worries about rising inflation and what this means for general living costs and interest rates, as well as stricter mortgage criteria and the focus on affordability, are having an impact on people’s decision-making.
Low levels of housebuilding continue to prop up house prices and while proposals in the White Paper may attempt to address this, the reality is that it is unlikely to change anytime soon. There is no early prospect of any meaningful changes in the short term - it really is a long-term project which won’t so much help this generation of first-time buyers as the next one."
Jonathan Hopper, managing director of Garrington Property Finders, comments: “The only person cheering these underwhelming figures will be Sajid Javid. The Halifax’s snapshot of a property market in which prices continue to sleepwalk upwards because of the chronic lack of supply is the perfect scene-setter for his Housing White Paper.
But it also shows the mountain that Britain needs to climb to get back a truly free-flowing property market. Overall demand is robust – with the Bank of England reporting the highest number of mortgage approvals since last March’s Stamp Duty Stampede – but patchy. With supply still bumping along at rock bottom, prices are being supported by the lack of choice and this is keeping the quarterly and annual rates of price growth relatively steady.
But on the front line, it is far from a seller’s market, with astute buyers able to ask for and win big discounts. The result is greater levels of month-to-month volatility and a sense of caution returning to the market, as rising consumer inflation threatens to drive up the cost of living faster than average wage rises.
On this evidence the market is likely to continue its hardwired pattern of price rises in 2017, albeit at a more subdued pace as house price-to-earnings ratios begin to bite in many parts of the country.”
Tarlochan Garcha, CEO at peer-to-peer property lending platform, Kuflink, said: “Despite the housing market taking its foot off the accelerator, there is steady momentum. But the days of double-digit price rises are gone, and while the market fundamentals are robust enough to drive growth this year, progress will be sedate.
But while mortgage rates remain low, and the labour market strong, buyers aren’t going to disappear into the ether.
Serious buyers are price sensitive, yet committed. Prices are being supported by the reckless imbalance between demand and supply, but deals are being done on decently priced quality homes.
The next few months will be crucial to set the tone for the year, as we enter peak buying season. For now, there's every reason to feel cautiously optimistic about 2017."