Property prices in the UK are continuing to be resilient since the vote to leave the European Union with the latest index figures showing that they increased by 0.1% in November.
But seasonal adjustments mean that year on year price growth slowed slightly to 4.4% from 4.6% in October, taking the average price of a home to £204,947, according to the index from lender Nationwide.
However, Nationwide chief economist David Gardner pointed out that growth is still in line with the current upward trend prevailing since early 2015.
‘There are some signs that, despite the uncertain economic outlook, demand conditions have strengthened a little in recent months, reflecting the impact of solid labour market conditions and historically low borrowing costs,’ he said.
‘Mortgage approvals increased in October, and surveyors report that new buyer enquiries have increased modestly. The relatively low number of homes on the market and modest rates of housing construction are likely to keep the demand/supply balance fairly tight in the quarters ahead, even if economic conditions weaken, as most forecasters expect,’ he added.
According to Alex Gosling, chief executive officer of online estate agents HouseSimple, the market is in surprisingly good health even although average prices are below £205,000 for the first time since June, the month of the EU referendum.
‘When you factor in the seasonal slowdown we would normally expect this time of the year, there’s nothing alarming in these figures. If anything, the market actually picked up in November. We saw a higher level of buyer activity than we would normally see at this time of year,’ he explained.
He believes some buyers might have held off for the outcome of the US election to see how the market would react. ‘We are likely to see transaction levels drop off in December, which is normal, before we enter a crucial period. The market needs a strong January, particularly with the possibility of Article 50 being invoked on the horizon,’ he added.
Rob Weaver, director of investments at property crowdfunding platform Property Partner, thinks the housing market is showing remarkable resilience in spite of a few wobbles in confidence post-Brexit. ‘We don’t have the double digit percentage increases of the middle of 2014 but still house price growth, at least for those who have already bought, is comfortably creeping up,’ he said.
‘Interestingly, the real certainty in uncertain times is the undeniable dearth in not only current available stock for sale but also longer term housing supply in the UK, which is acting as a buttress for prices. Combined with cheap borrowing rates and continuing high employment, house prices particularly in London and the South East are only heading one way in the mid to long term and that’s up,’ he added.
He pointed out that in the past two years UK home owners have seen their homes increase on average by more than £15,500, reflecting a rising market that looks unlikely to change anytime soon.
‘Last month’s autumn statement was positive news for housing with Philip Hammond announcing a £1.4 billion cash injection for a wide range of affordable homes, including potentially boosting rental stock, now seemingly for many the tenure of necessity rather than choice,’ he concluded.
Russell Quirk, chief executive officer of eMoov, suggests that supply will drop further as people put home selling aside over the festive period. ‘We expect this result in a drop in prices in the December index, although this will be far from unusual and nothing to panic over,’ he said.
Pragmatic sellers are willing to negotiate on price, according to Jonathan Hopper, managing director of Garrington Property Finders. ‘With Britain close to full employment and mortgage costs at a record low, the building blocks for borrowing are there. Crucially, buyer sentiment is there too, as revealed by Bank of England data this week that showed increasing levels of mortgage activity,’ he said.
‘Many would-be buyers who had been holding off until the referendum outcome settled have given up trying to second guess the impact of Brexit on their finances and are instead focusing on the property market’s strong fundamentals,’ he explained.
‘But despite the gentle upward drift in prices, in many areas it’s a buyer’s market with pragmatic sellers increasingly willing to trim asking prices to secure a sale. The result has been to shift the balance of power firmly into the hands of buyers. With price cuts available for those who negotiate hard, growing numbers of buyers are deciding that now is the time to act,’ he added.