The latest Halifax House Price Index shows that the nation’s property market has started to thaw from the previous consecutive two-month decline in property values, with prices creeping up by 0.4% in February putting the new average house price at £224,353.
However, a higher degree of market uncertainty, coupled with the seasonal lull towards the end of last year, has resulted in the market taking a while longer than usual to find its feet heading into spring. As a result, prices over the last quarter have fallen marginally by -0.7%, the first time there has been a quarterly decrease since May of last year.
While UK homeowners are still better off than this time last year with house prices up 1.8% on last year, the annual rate of growth is the lowest it has been since March 2013.
However, despite this market stutter, there are positive signs for house price growth. The number of monthly UK home sales exceeded 100,000 for the thirteenth successive month, while the number of mortgage approvals rose sharply in January, up 9.4%.
With interest rates remaining at a near-historic low, the availability of mortgages for UK home buyers remains high. This has no doubt contributed to the increased buyer demand noted by Halifax and the sustained market activity translating to actual sales shows that the market is starting to find its stride once again.
Despite the Government’s announcement earlier in the week on how they will fix Britain’s broken housing market, the supply of building stock to satisfy home buyer demand remains way out of kilter and in the long term, will keep house prices climbing.
Despite the marginal increase, prices have continued to stall heading into spring suggesting the usual seasonal market hangover has persisted for a while longer than usual.
That said, we’ve seen a notable pick up in sellers listing their homes for sale across the UK and while still slightly subdued, there is certainly an appetite from the buyer’s side as well. As this increase in stock starts to filter through to actual sales, we will no doubt start to see a stronger, more sustained rate of upward growth.
While Theresa May’s has set out yet more promises to fix our broken housing market earlier in the week, it seems any meaningful resolution is at best a long way off, at worst unlikely to materialise. As a result, prices will remain buoyant in the long term due to the strain on the nation’s property stock levels, coupled with persistent demand from home buyers as a result of the lower barrier to obtaining a mortgage.Russell Quirk