Property

Persistent economic uncertainty kicks annual house price growth to six-year low

Warren Lewis
|
7th October 2019
house prices 5

The latest data and analysis of the UK housing market has revealed that annual house price growth dropped to 1.1% during September, the lowest year-on-year rate since April 2013.

According to the report, prices fell by 0.4% on a monthly basis and rose by 0.4% over the quarter.

Russell Galley, managing director at Halifax, comments on this morning's figures: “Annual house price growth slowed somewhat in September, rising by just 1.1% over the last year. Whilst this is lowest level of growth since April 2013, it remains in keeping with the predominantly flat trend we’ve seen in recent months.

Underlying market indicators, including completed sales and mortgages approvals, continue to be broadly stable. Meanwhile for buyers, important affordability measures – such as wage growth and interest rates – still look favourable.

Looking ahead, we expect activity levels and price growth to remain subdued while the current period of economic uncertainty persists.”

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

Guy Harrington, CEO of property lender Glenhawk, says: “The UK market is characterised by inertia, with the political and economic backdrop a major contributing factor. It’s unlikely this will change anytime soon; flat housing growth will be here for some time. The real worry will be if we start seeing negative growth, which is a real possibility”

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "Transaction numbers are low so lenders are having to work incredibly hard to generate business and stand out from the competition. This means even further cutting of fixed-rate mortgages, while those lenders who can’t compete on price are having to tweak criteria and be more flexible than perhaps they might have been in the past.

This is excellent news for borrowers and once buyers return to the market, when the uncertainty is removed from the equation, there are some extremely competitive products for them to take advantage of."

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "The market is still proving to be more resilient than we dared hope in view of the continuing political uncertainties. Fortunately, buyers, particularly of larger flats and smaller houses, are taking advantage of rock-bottom mortgage rates and improving affordability by looking beyond Brexit and taking a longer-term view.

This is certainly what we are finding at the coalface too and increasingly hearing of a determination among buyers and sellers to find middle ground on pricing, which still represents value to both."

Marc von Grundherr, Director at Benham & Reeves, comments: "These most recent of statistics from one of the country's volume mortgage lenders are the latest in a very mixed picture and one that adds to confusion as to what on earth the property market is really doing. The various indexes of late have not only contradicted each other but often contradict themselves month on month - in fact, the numbers have bounced around like a beach-ball on a bungee rope since the beginning of the year.

The upshot is that whilst the monthly rate of increase in house prices across the UK is negative, the fact that the year on year numbers are still positive, quiote honestly defies the gravity that the current political fracas should otherwise be dictating. A post-Brexit bounce? We live in hope'

Shepherd Ncube, Founder and CEO of Springbok Properties, had this to say: "Resilience seems to be the underlying trend in UK property values overall. Westminster shenanigans seem unable to tarnish the gloss from the market and we continue to see almost uninterrupted house price growth on an annual basis albeit that that growth is certainly more subdued.

You can be forgiven for thinking that a 0.4% decrease in values since August is startling however it is by no means the most stand-out stat of the last few months with, for instance, January's Halifax data showing a 2.9% drop on the month before but then a 5.9% rise the next month. Perhaps it's about time we paid less attention to the minutiae of frequent house price statistics and just focussed upon a property being a home instead?"

Tomer Aboody, director of property lender MT Finance, says: "It is not surprising that there has been a little growth in property prices because some people have to get on with their lives, but there isn’t more of it as others are procrastinating.

Brexit is the main cause of inaction and either way it has to be resolved. At least Boris Johnson has some direction and wants to find a resolution. Even those who voted remain are now at a point where they realise something has to happen or we face another three or four years of messing around, which would be disastrous for the economy.

The next issue after Brexit is a general election and the spectre of a Corbyn government. But hopefully the Tories will get a majority and then there will be financial stimulus, such as stamp duty reform, to get things going.

The last quarter of the year is usually one of the busiest for our industry. Everyone you talk to expects it to be busier than the previous three quarters but that is a seasonal situation and no different to any other year. Also, it’s all relative because the market has been so difficult this year."

Mike Scott, chief property analyst at Yopa, added: "The Halifax House Price Index for September is coming back into line with other reports, showing a fall of 0.4% for the month and a rise of just 1.1% over the year. It is now at its lowest year-on-year rate since April 2013.

Halifax expects that the current subdued level of market activity and price growth will continue until there is more economic certainty, but observes that affordability is improving, with rising wages and continuing low mortgage interest rates, suggesting that there is no reason for a sustained fall in house prices. However, we expect that there will be some short-term volatility in the Halifax’s figures (which are based on mortgage approvals) over the next couple of months, as the 31 October Brexit deadline approaches with apparently little prospect of a deal."

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