The latest data and analysis of the UK housing market from Halifax has revealed that prices in the three months to December were 1.3% higher than in the same three months a year earlier – up from the 0.3% annual growth rate recorded in November.
According to this morning's figures, house prices in the latest quarter (October-December) were 0.4%lower than in the preceding three months (July - September)
On a monthly basis, house prices increased by 2.2% in December, following a 1.2% fall in November
Halifax estimates that the average house price in the UK is now £229,729
Monthly UK home sales maintain slight rise in latest quarter. The November home sales figure of 100,930 was 100 above the October sales figure. November sales were also 1.8% above the previous 12 month average. There has also been a 2.1% rise when compared to the previous quarter in 2018. However, on a longer view less change is evident as the November figure of 100,930 is marginally below the 5 year average of 101,587.
In November mortgage approvals fell to the lowest rate since April 2018. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchases – a leading indicator of completed house sales fell 4.5% to 63,728. October had seen a relatively high approval rate for 2018, and while there is a drop in November, it is still not far below the 2018 average of 64,955.
Demand for housing and the number of sales both fall. The November 2018 RICS UK Residential Market Survey showed a drop on nearly every measure reviewed. The New Buyer Enquiries gauge fell to -21% in the latest results from -15% previously, indicating property purchasers are more cautious. Further to this the Newly Agreed Sales net balance moved to -15% from -10% indicating a decline in national sales transactions.
Russell Galley, Managing Director, Halifax, said: “In December the average cost of a home was £229,729 and annual house price growth stood at 1.3%. A stronger monthly growth figure for December reversed a weak November figure, monthly fluctuations are common, leaving the annual figure very firmly in the range of 0-3% as we forecast at the start of the year.
In 2019, we’re expecting continued stability in house prices with between 2% and 4% price inflation. This is slightly stronger than 2018, but still fairly subdued by modern comparison. However, this expectation will clearly be dependent on the Brexit outcome, with risks to both sides of our forecast.
Of course, there are a number of other factors that will impact the mark et in 2019. The need to raise a significant deposit still acts as a restraint for those look ing to buy a new home, limiting the number of potential purchasers.
This year, mortgage payment affordability is more difficult to predict. There are competing pressures with signs of positive annual pay growth supporting affordability, but risks associated with the potential for higher interest rates are pulling in the other direction. On balance we do not see affordability pushing house price growth significantly in either direction.
The shortage of homes for sale and continuing low levels of housebuilding both constrain the supply of houses, and in turn support high prices, which will continue to inhibit demand in 2019.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "At first glance the Halifax numbers are really positive as they reflect a time of particular political uncertainty and the height of Brexit turmoil. But when taken with the recent fall in transactions it is clear that the increase has more to do with a shortage of stock rather than a bounce back in the market generally.
On the ground, the market remains tentative and the sales which are agreed are taking much longer than previously, which is only heightening indecision.
This year has begun more positively than we had dared anticipate after so many negative predictions. But clearly it remains to be seen whether those early good viewings and valuation numbers translate into good offers and more realistically priced listings."
Andy Soloman, CEO at Yomdel, commented: “Somewhat of a shock result with the housing market staging one of the great, late comebacks in 2018, although a string of shoddy results means that prices are still down on a quarterly basis.
Despite the strong monthly growth, this erratic movement will do little to stabilise a market that has and will continue to suffer from wider political uncertainty.
While other external factors such as mortgage affordability and a lack of stock may continue to stimulate the market to a certain extent, we’ve already seen a number of inbound buyer and seller enquiries stating concerns over Brexit so far this year.
This political rot is setting in at all levels of the market, not just the upper echelons and while largely restricted to London and the South East, this air of trepidation is likely to persist until the credits roll on the government’s comedic Brexit offering.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "Brexit is looming over the housing market, creating uncertainty and indecision. But lenders remain keen to lend and pricing is still competitive, as they try to attract business.
Some lenders, such as Barclays, have reduced rates in an effort to generate business, with remortgaging incentives such as cash back increasingly on offer in the hope of attracting borrowers keen to get their finances in order at the start of a new year."