The UK property market is ‘sleepwalking into winter’

The latest house price figures suggest a housing market in remarkably good health, but low supply levels continue to distort the real picture.

Residential property prices in the UK are rising faster than the general rate of inflation, new data from the Halifax shows.

The country’s largest mortgage lender said that property prices rose by 3.9% in the year to the end of November, down from 4.5% in October.

Despite the slowdown, the pace of house price growth remains above Consumer Prices Index (CPI) inflation, which is currently 3%.

Last week, rival lender Nationwide said prices had risen by 2.5% over the past year.

According to the Halifax, the average residential property in the UK is now selling for £226,821, which raises the question, how much is your property now worth?

Market reaction:

Russell Galley, the managing director of Halifax Community Bank, said: “The imbalance between supply and demand continues to support house prices, which doesn’t look like changing in the near future.

He added: “Further ahead, increasing affordability issues, as price increases continue to outstrip wage growth, are likely to curb housing demand and cause price growth to ease.”

Jonathan Hopper, managing director of Garrington Property Finders, commented: “The property market is sleepwalking into winter, with average prices making stumbling progress at best.

“The modest uptick in both the quarterly and month-on-month rates of price growth shouldn’t be seen as anything more than a pyrrhic victory, as the annual trend remains rudderless.

“It’s tempting to dismiss what price growth there is as a mere side effect of the chronically low levels of supply, but that does a disservice to the brisk levels of demand in several regions.

“But demand is being channelled by one over-riding consideration – affordability. With wages falling in real terms and buyers wary of overpaying while the market is in flux, even the most determined buyers are willing to walk away if the price isn’t right.”

Alex Gosling, CEO, online estate agents, said: “These figures suggest a housing market in remarkably good health, but low supply levels continue to distort the real picture.

“The property market’s not on its knees by any means, but it needs a spark from somewhere.

“Market activity has dropped off, which it tends to do the closer we get to Christmas. But it’s definitely dropped off earlier than normal this year.”

Lucy Pendleton, founder director of independent estate agents James Pendleton, commented: “Despite the first rate rise in over a decade, there is no batting collapse in the UK housing market. Buyers still put on their cricket guards and marched out towards the crease.

“That’s most likely because rates are still very attractive by historic standards even if they have edged up. So we’re not seeing the Big Dipper-style change in direction some might have predicted.”

Ishaan Malhi, CEO and founder of online mortgage broker Trussle, said: “The picture has been fairly blurred in recent months but all indicators now seem to agree that prices are creeping up again. This is clearly good news for existing homeowners, who will see more than just the value of their home increase. Their share of equity will also grow, meaning they could be eligible for more competitive mortgage deals when they come to remortgage in future.

“The news is more mixed for first-time buyers. Those who are ready to buy will likely see the growth in house prices more than made up for by the new stamp duty savings. For those unable to buy just yet, the prospect of further interest rate rises won’t help.”

Ged McPartlin, director at Ascend Properties, commented: “Whilst an annual increase of 3.9% demonstrates the resilience of the UK property market, this growth is underpinned by a lack of supply which isn’t showing any signs of improving.

“Whilst developers are scrambling to bring new stock to the table, it’s just not happening quickly enough to correct the supply and demand imbalance. That being said, 2018 will be interesting as we’re likely to feel the effects of the stamp duty abolition. Already we’re seeing a hive of activity from first-time buyers who are now back on the hunt due to this reprieve.

“Next year will be the year that first-time buyers get back on the map – if they can find the stock in the first place.”