Housing market in limbo due to Brexit uncertainties

The latest statistics released by ONS on the UK housing market continue to paint a picture of a stagnant market that is feeling the impact of uncertainties surrounding Brexit, a disappointing budget and a continuing lack of stock.

Related topics:  Property
Warren Lewis
14th November 2018
house prices 5

According to the figures released, average house prices in the UK rose by 3.5% in the year to September - marginally up from 3.1% in August.

However, the continued slowdown across the south and east of England is causing a noticable drag on national house price growth. In England, house price growth remains weaker than the rest of the UK, with the lowest annual growth in London where prices fell by 0.3% over the year.

The West Midlands showed the highest annual growth, with prices increasing by 6.1% in the year to September 2018, followed by the East Midlands at 6.0%. House prices in Wales and Scotland both increased by 5.8% over the last 12 months, while Northern Ireland saw growth of 4.8%.

As ever, the property industry was quick to react. Here's what they're saying:

Mike Scott, chief property analyst at Yopa, comments: "The official government house price index shows prices still rising at an annual rate of 3.5 per cent, but with no increase in the month. Regionally, the fastest-rising regions are the East and West Midlands, which are both seeing 6 per cent annual increases, while London has been falling since March and has fallen by 0.3 per cent on an annual basis. The price of new-build property is rising much faster than the overall average, with an annual increase of 6.8 per cent, while the price of second-hand homes rose by only 2.9 per cent over the year.

All of the growth in prices over the past year took place in the months since April, so if prices now remain flat the annual rate of growth won’t start to fall until the second quarter of 2019. With economic fundamentals remaining strong, we do not expect to see a sustained fall in prices over the next few months, and so the annual rate is unlikely to move into negative territory in the foreseeable future."

Jeff Knight, Marketing Director for Foundation Home Loans commented: “Never-ending political uncertainty has clearly dragged on buyer confidence, with the property market at its weakest for six years. A limbo state is never a good sign but doesn’t mean everything comes to a complete stand still – regionally we are still seeing significant investment interest which confirms it’s not all doom and gloom.

On the buy-to-let side activity has been supported by rising tenant demand due to numbers of landlords preparing to sell up and avoid the new buy-to-let taxation. Supporting prospective buyers and tenants as they navigate the market when people are unlikely to strike a deal until negotiations have come to an end is crucial. An increase in those needing specialist financial support is something lenders should have at the top of their agenda as we head into year end.”

Mark Readings, Founder and Managing Director of online estate agency, House Network, said: "The market slowdown is mainly driven by the lack of stock coming onto the market, with London and South and East of England being at the forefront. We have seen many sellers remain on the fence due to the lack of uncertainty of the Brexit outcome, this has a knock on effect and leaves risk-averse buyers willing to wait until these political uncertainties are resolved in the upcoming months.

Despite slow house price growth in England, the market is still extremely attractive and as this uncertainty fades, the market fundamentals of low-interest rates, strong employment figures and the recent extension of the government help-to-buy scheme, will all drive the market and support a positive upturn in 2019."

Gary Barker, CEO Reapit, said: "House price growth of 3.5% in the year to September 2018 reflects a lacklustre market, helped little by the Chancellor’s recent budget. This is compounded by weakening of previously solid sales activity, as supply is increasing, which until recently had been propping up an already frail market. Strong sales figures from earlier this year, in the South East and North West in particular, were likely due to a seasonal spike.

The pending Brexit deal is causing caution in the market from buyers, and the news that a draft deal has been completed yesterday will certainly cause further uncertainty.

What had promised to be a more positive start for the market in 2019 now looks to have been a false dawn. We will be watching closely as the Brexit plan moves through Parliament to see if the market responds positively and sales pick up.”

John Eastgate, Sales and Marketing Director of OneSavings Bank comments: “Brexit related uncertainties are weighing on many minds, and whilst the NAEA has reported an increased supply of houses for sale, demand from buyers is subdued. The days of rapidly escalating house price inflation are behind us and we should envisage a period of more steady, and arguably sustainable growth. Brexit remains unhelpful in the macro context, but equally, the systemic issues within our housing market remain unaddressed and these will underpin long term growth in house prices.”

Chrysanthy Pispinis, Post Office Money, says: “House price growth is slowing across the UK, particularly in the South; a trend we expect to continue while the market remains uncertain. This slowdown presents a window of opportunity for first-time buyers as changes made such as tax incentives and product innovations have supported more buyers to enter the market; in the last year alone for instance, we’ve seen successful FTBs increase by 12%.

Increased housing supply, which has supported affordability and more ‘deposit-free’ mortgage options, has helped one in 10 new buyers to get on the ladder. Other changes, such as the abolition of stamp duty for properties up to £300,000, have helped the average FTB save over £2,000.

These savings can make a huge difference to FTBs’ ability to effectively plan and budget for the full costs associated with moving, which are often underestimated by 80% of buyers.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, had this to say: "Once again we are seeing prices softening but no dramatic change, underpinned by low mortgage rates and supply. The price falls in London are masking a more resilient picture elsewhere in the country, underlining how misleading it can be to judge the market as a whole by what is happening in one region.

The biggest problem we are finding, on the ground, is lack of transactions and the time required to bring them to fruition. Brexit is not the main culprit, although news today that negotiations may finally be coming to a conclusion will be welcome. Historic affordability issues, particularly in London, are more of a problem. Yesterday’s news that wages have now been rising faster than inflation for the past eight months will bring a welcome boost to buyer confidence."

John Goodall, CEO and co-founder of Landbay, said: “Accelerating growth is being held back by falling property value in London, dragging down the rest of the country. Following years of steep price rises, affordability in the capital has become stretched. Combine this with the punitive changes to stamp duty and Brexit uncertainty, and it’s no wonder that would-be buyers and sellers are staying put.”

More like this
Latest from Financial Reporter
Latest from Protection Reporter
to our newsletter

Join a community of over 20,000 landlords and property specialists and keep up-to-date with industry news and upcoming events via our newsletter.