UK property market resilient with strong growth as Brexit looms

House prices in the UK increased by 2.8% in the 12 months to February 2019, taking the average price to £236,800, the latest lender index shows.

Month on month prices were up 5.9% and quarter on quarter they were up by 1.8%, suggesting a stronger than expected start to the year with Brexit less than a month away, according to the Halifax figures.

Russell Galley, Halifax managing director, pointed out that house prices have grown on an annual, quarterly and monthly basis for the first time since October 2018. He believes that it is the shortage of supply that is supporting growth.

He also pointed out, however, that while annual house price growth at 2.8% is within Halifax’s expectations, it is fairly subdued compared to 2015 and 2016, when the average growth rate was 8.3%.

‘People are still facing challenges in raising a deposit which means we continue to expect subdued price growth for the time being. However, the number of sales in January was right on the five year average and, at over 100,000 for the fifth consecutive month, the overall resilience of the market is still evident,’ he added.

According to Dilpreet Bhagrath, mortgage expert at Trussle, while the figures look positive, it is not so good that home owners seem reluctant to move, with many adopting a ‘wait and see’ approach to see how any Brexit deal might affect the market.

‘Buyers, particularly those looking to get on the ladder for the first time, shouldn’t be put off by rising prices. There are still good offers to be had in some areas of the country. Potential buyers who are concerned about the economic impact of Brexit should also be considering their own current and future circumstances when it comes to mortgaging. Opting for a fixed-rate mortgage may give provide more stability as they’ll know how much their payments are each month,’ she said.

But whatever happens with Brexit will be the test for the housing market, according to Sam Mitchell, chief executive officer of online estate agents Housesimple. ‘Even with an acceptable exit deal in place, house prices are likely to face some heavy turbulence. But it’s nothing the property market can’t take in its stride,’ he said.

‘We can’t say with any degree of certainty how buyers and sellers are going to respond over the coming weeks, especially if a no-deal becomes the most likely outcome. There’s some evidence to suggest that sellers and buyers have already decided to wait, particularly in and around London,’ he explained.

He also pointed out that sales activity in the North West of England and Yorkshire alone is strong and there could still be a post Brexit bounce. ‘Far too much has been made of stalling price growth in the capital and the part Brexit has played, when in fact London was already showing signs of running out of steam well before politicians started squabbling around the Brexit table. The danger is that stuttering house price growth in London sets the tone for the whole country,’ he explained.

‘And the strength of regional property markets in the north, buoyed by strong first time buyer and investor numbers, is an encouraging sign that the performance of the UK’s housing market is not determined by what’s happening within the M25,’ he added.

(c) Property Wire, 8 March 2019