At the end of last month Nationwide reported that house prices had finally bucked their previous election influenced downward trend, to show spring like grass shoots of positive growth. However, contrasting data by rival bank Halifax today report that during the month of June, house prices fell by -1%, down -0.1% over the last quarter.
House prices have flattened over the past three months. Overall, prices in the three months to June were marginally lower than in the preceding three months. The annual rate of growth has fallen, to 2.6%; the lowest rate since May 2013. “Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages. This, combined the new stamp duty on buy to let and second homes in 2016, appears to have weakened housing demand in recent months.Martin Ellis
The decrease was largely expected due to the recent general election as many home sellers and buyers held off on their transaction until some political stability had returned to the UK.
Although the result of the election was less than satisfactory and there is still a degree of uncertainty surrounding the future government, Nationwide’s previous figures suggest that rather than wait for the final outcome, home sellers and buyers have grown tired of the current political spectacle and have pushed on with their property transaction – and it is expected that Halifax’s data will echo this at the end of July.
Despite a cool in the market, house prices are still up 2.6% annually and with interest rates remaining at a record low and with a rejuvenated level of buyer demand returning to the market, property values are predicted to remain at this level for the long term.
Contrasting figures from Halifax after Nationwide reported signs of a pulse returning to the UK property market, but given both sets of numbers, it would seem reports of a market demise have clearly been exaggerated.
Despite the recent claims the market is due to see a notable crash with prices falling by as much as 40%, this remains very unlikely. The market is not dead or running on the life support of easily obtained credit and has suffered more of a grazed knee than a fatal injury.
A momentary blip is certainly not substantial enough to label as a trend and those that have, are doing so prematurely. Resilient levels of buyer demand, heightened by a paltry supply of stock and coupled with historically low interest rates will continue to fuel house price growth in the medium and long term.Russell Quirk