Annual house price growth flatlines in January

The latest data and analysis from Nationwide has shown that annual house price growth almost ground to a complete halt in January, with prices just 0.1% higher than the same time last year.

Related topics:  Property
Warren Lewis
31st January 2019
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Robert Gardner, Nationwide's Chief Economist, said: “Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, but forward-looking indicators had suggested some softening was likely.

In particular, measures of consumer confidence weakened in December and surveyors reported a further fall in new buyer enquiries towards the end of 2018. While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months.

Uncertainty exerting a drag on the market

It is likely that the recent slowdown is attributable to the impact of the uncertain economic outlook on buyer sentiment, given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs.

Near term prospects will be heavily dependent on how quickly this uncertainty lifts, but ultimately the outlook for the housing market and house prices will be determined by the performance of the wider economy – especially the labour market.

The economic outlook remains unusually uncertain. However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low single-digit pace in 2019.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "Although not showing much change, these figures confirm a market struggling to weather the Brexit storm but not collapsing. The fall in December has been replaced by a modest rise in January but this is probably just as much to do with shortage of stock as release of some inevitable pent-up demand in the post-Christmas period.

Looking ahead, there are probably too many potential bumps on the road to give a clear steer as to the future direction of prices and activity but what is apparent is that there remains a determination among a good number of serious buyers and sellers to find a way of moving on."

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "Uncertainty seems to be the main issue plaguing the housing market, with potential buyers and sellers sitting on their hands and waiting to see what happens with Brexit.

However, lenders won’t be put off. They have started this year the way they finished the last one - keen to lend and offering some competitive products to encourage borrowers to take the plunge. Those who are in the market for a new mortgage or remortgage will find plenty of attractive deals, with many lenders cutting rates in the past couple of weeks or tweaking criteria. We expect pricing to remain low in the coming weeks as lenders compete for somewhat limited business in very uncertain times."

Andy Soloman, founder and CEO of Yomdel, commented: “More of a case of the January purples than the January blues for the UK property market and following the seasonal slowdown of the festive season it seems to have lost almost all momentum heading into the New Year.

This stagnation isn’t quite consistent with the wider economic picture but unfortunately for the nation’s homeowners, the Brexit inspired ups and downs that have plagued the market over the last year, seem to have remained as the UK continues in its struggle to leave.

Going forward we should see a fairly muted performance in the short term, but mortgage rates remain low, wages are creeping up and employment growth is strong, and this will bring an air of stability and consistency if nothing else.”

Paul Telford, founder and CEO of OkayLah.co.uk, commented: “We’ve seen some positive signs of resilience from the UK market so far this year, particularly within the mortgage sector, so this early stutter in price growth may come as a surprise to many. However, these initial indicators of an improvement in market health will take some time to filter through and given the turbulent year it has endured, the UK market can be forgiven for coming out of the blocks a little more lethargic than it may have in previous years.

While buyer demand seems to be returning to the market, it’s also likely that we will see further caution and a reluctance to lower asking prices by UK home sellers over the coming months, which could further mute the level of price growth. Impending political outcomes will also continue to have an impact however, the market should find its feet and stabilise to a degree.”

Dilpreet Bhagrath, Mortgage Expert at online mortgage broker Trussle, had this to say: “House prices are continuing to remain fairly stagnant. With Brexit negotiations ongoing causing continued economic uncertainty, many potential sellers will be reluctant to move on, and many potential buyers will be waiting it out to see what happens with property prices next.

For those who are currently in a position to buy a home, building up equity in a home can be more beneficial than throwing away money on rent. For first-time buyers who are nervous about the unpredictable market, opting for a fixed rate mortgage will ensure you’re aware of how much you’re paying for your mortgage each month, and avoid any instability. It’s always worth considering personal circumstances and future plans alongside movements in the economy.”

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