Property UK: The housing market has slowed as it awaits the results of Brexit negotiations
As 2018 draws to a close, we’ve perhaps seen the most disparate market in a decade with some regions experiencing exceptional growth, such as the Midlands, Yorkshire and the Humber, Wales and Scotland, whereas others, most notably London, the South East and latterly, the South West, have seen the market stutter and grind to a halt as consumer confidence has struggled.
A report released from the Land Registry this morning provided an insight into market performance in September, which whilst a little historic does at least provide a totally independent view of value changes around the country.
According to the data, there was no movement last month at headline level in the average property price compared to August, although there was an annual price rise of 3.5 per cent, meaning that the average property in the UK is now valued at £232,554.
However, there was a distinct disparity in terms of regional performance. In particular, the figures for London show that, on average, house prices have fallen by 0.4 per cent since August 2018, with an annual price fall of 0.3 per cent taking the average property value to £482,241.
Regionally, the fastest-rising regions are the East and West Midlands, which are both seeing six per cent annual increases, while London has been falling since March and has fallen by 0.3 per cent on an annual basis
This is in comparison to the East Midlands and West Midlands which both experienced the greatest monthly price rise of 1.1 per cent.
Reviewing the figures, Mike Scott, chief property analyst at online estate agency Yopa said: “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 six per cent annual increases, while London has been falling since March and has fallen by 0.3 per cent on an annual basis.”
Mike continued: “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.”
Property UK: Experts say a 1/3 of homeowners are waiting until Brexit is finalised to make decisions
Nick Leeming, Chairman of estate agents Jackson-Stops, also commented: “It is interesting to see that the East and West Midlands regions continue to far outperform those across the rest of the UK when it comes to annual house price growth, demonstrating greater levels of confidence in the face of our impending exit from the EU.”
These latest statistics also support data released yesterday from lending trade body UK Finance. The report, based on mortgage completions in September, underscores that the market has flatlined overall, but remains robust as the better performance of some parts of the UK and certain sectors continue to prop up the headline figures.
For example, as Brian Murphy, Head of Lending for Mortgage Advice Bureau highlighted, whilst the number of First Time Buyer mortgage completions in September dropped from 35,400 in August to 29,400 in September, overall the number of those buying their first over the last calendar year, which stands at 394,700, is likely to be the highest since before the credit crisis of 2008.
Brian added: “Looking at the data from UK Finance overall, whilst mortgage completions slowed in September, they didn’t fall off a cliff either.
“The recently reported modest increase in wage growth coupled with average house prices growth flatlining means that buyers in some areas have a window of opportunity to take advantage of better affordability, particularly given that lenders very much remain ‘open for business’ and are still offering product rates at near historic lows.”
Property UK: House prices in London have fallen 0.4 per cent since August
So, what difference could a Brexit deal announced this week make to house prices and activity? In some areas where confidence is already high, one could argue very little. However, in other regions, such as London and its surrounding commuter belt, the impact could be more apparent, albeit perhaps not immediately.
It’s currently estimated that over a third of all homemovers are taking a ‘wait and see’ approach and putting off making any decisions with regards buying or selling until such times that a deal is finalised – or not, as the case may be.
With so much employment in and around the Capital reliant on financial services and their supporting industries, or with European companies in other sectors who have offices in London, there has been widespread concern about how the UK’s divorce from Europe could lead to difficulties in the jobs market; a factor that has caused palpable buyer and seller caution since the referendum result.
Throw in the fact that average house prices in London have, in recent years, escalated beyond the reach of average incomes, and it’s easy to understand why both transactions numbers and prices have suffered of late.
Whilst a ‘soft’ Brexit would doubtless appease the stock markets in the short term – indeed, the pound surged against the Euro yesterday in a near seven-month high at the news that a deal framework had been reached – many suggest that it could still take months for consumer confidence to return in the worst hit areas, as job security fears may take some time to subside, regardless of an agreement being ratified this month by Theresa May.
However, for the brave buyer, the next few weeks could lead to the tantalising prospect of negotiating a significant deal on their purchase that may be hard to replicate should the market recover next Spring once the dust has settled.
Follow Louisa on Twitter: @louisafletcher