A further slip saw annual house price growth drop to 0.2% in September, marking the tenth consecutive month it has been below 1%.
The figures, released by Nationwide this morning, paint a stark picture of the UK housing market as the country holds it’s breath ahead of potentially crashing out of the EU at the end of the month.
Prices saw a 0.2% monthly fall, with price falls persisting in London and the South East.
Northern Ireland remained the strongest performing home nation in Q3, though annual price growth moderated to 3.4% from 5.2% in Q2. Wales also saw a slowdown to 2.9%, from 4.2% last quarter. Annual price growth in Scotland remained subdued at 0.8% (up slightly from 0.4%). England remained the weakest performing home nation, with prices essentially flat compared with a year ago.
Elsewhere in England, annual price growth remained relatively weak in Q3, with the North West the best performing region, with a 2.5% year-on-year rise.
Robert Gardner, Nationwide’s chief economist, said: “UK annual house price growth almost ground to a halt in September, at just 0.2%. This marks the tenth month in a row in which annual price growth has been below 1%.
Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty. However, the slowdown has centred on business investment – household spending has been more resilient, supported by steady gains in employment and real earnings.
The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook.”
As ever, the property industry was quick to react. Here’s what they’re saying.
Josef Wasinski, co-founder of Wayhome: “Taking that first step onto the housing ladder is virtually impossible for millions of hard-working creditworthy individuals. For those stuck renting, the reality is that without a huge deposit the only options available are either remaining a renter or buying a home which is unsuitable.
To give aspiring homeowners options and the ability to move on from their status as ‘reluctant renters`, we need to be seeing real change within the market. Without new and alternative routes to homeownership, people will continue to struggle.”
Gareth Lewis, commercial director of property lender MT Finance said, “This is not armageddon but what we have seen for many months – property prices stabilising, which means a small increase in some areas and a small decrease in others. The southeast has been hardest hit but if we cast our minds back to 2013-15 that was the area with the fastest period of growth so it is a case of rebalancing and returning to a realistic growth pattern for what has been an overinflated area.
Growth in other areas such as Northern Ireland and the northwest show that people are looking for opportunities for value.
Is this the new norm – modest growth rather than boom and bust? More modest year-on-year growth is more manageable than say 25 per cent and it will be interesting to see where prices settle after Brexit.”
Sam Mitchell, CEO of online estate agent Housesimple said, “Typically September marks the start of an upturn in housing market activity after the annual summer siesta but I think we can all appreciate that this is not a normal September. As the deadline to Brexit edges closer it is reassuring to see any growth at all, albeit very slow, with some buyers and sellers keeping their nerve in these times of political uncertainty. Life moves on despite the best efforts of our politicians.
“House prices in London and the South East have been hit particularly hard, but let’s not forget prices continue to grow in all other regions. While the north-south divide may be narrowing, northern regions are still experiencing consistent growth as buyers make the most of increased affordability alongside the ultra-competitive mortgage rates of late.
“It’s hard to say what the next month will have in store; home movers will either be looking to strike fast to complete deals before we leave the EU, or hesitation could continue to dominate the market. Either way, life goes on and people should consider taking advantage of the quieter period and strong economic fundamentals to make the move up the ladder whilst they may be able to negotiate a favourable deal.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “London was the weakest performing region in Q3, the ninth quarter in a row that prices have fallen, but while this is welcome for those struggling to get on the housing ladder or move up, prices are still only 5 per cent lower than all-time highs. This suggests that this correction has not yet made the capital affordable, but maybe stopped it getting quite so far out of reach. Average figures mask significant differences across both the country and the capital so it is hard to get a true picture of how the market is performing.
What is clear is that lenders are keen to lend and extremely competitive mortgages are the result. It is a good time to be a borrower.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: ‘What these figures tell us is that there hasn’t been much change in the market, which in some ways could be interpreted as good news with so many other potentially difficult distractions elsewhere.
On the ground, we have seen more serious buyers and sellers determined to find some middle ground and particularly for longer-term purchases such as larger flats and family houses where short-term uncertainties seem to be less relevant.”
Guy Harrington, CEO of property lender Glenhawk, had this to say: “If these were ‘normal’ times, we’d expect the favourable underlying drivers of low interest rates and high employment to be supporting a buoyant market. However these are unprecedented times and the record that is playing housing growth is stuck until the needle bounces over the Brexit bump, although that assumes that’s all it is.”
Guy Gittins, Managing Director, Chestertons said, “London acts as the epicenter of house price growth and any changes in Prime Central typically ripple out to the wider market. With that in mind, the increase in activity in the last quarter, in comparison to that of 2018, suggests the market has bottomed out, despite reports of a persistent price decline.
Year on year, both Chestertons’ applicant and viewing levels rose by 11 per cent in Q3. Regionally, we have seen the biggest percentage increase in super prime central London and the areas surrounding Fulham, driven predominantly by interest from overseas buyers taking advantage of the weaker pound.
New instructions coming to the market are down 15 per cent and, as a result, there is widespread acknowledgement from buyers that, due to an acute shortage of good quality stock, prices have firmed or in some cases have started to see a recovery. Last year, vendors had to chase the market down but we’re now seeing 27 per cent fewer price reductions.
As soon as there is any kind of certainty from government, we wholly expect there will be a wave of activity and as a result, buyers in central London are seizing the opportunity to make that purchase now. This is evidenced by the 50 per cent uplift in the number of agreed deals in prime central versus the same period last year, and a 20 per cent uplift across our whole London market.”
Iain McKenzie, CEO, The Guild of Property Professionals said, “While the sales volumes and activity in the market has overall seen a decrease as a result of political uncertainty and consumers adopting a wait-and-see approach, which in turn has had an impact on pricing, we are confident that once a decision is made and we have a clear path ahead, we will see a resurgence in activity and buyers returning.
“When the extension of Brexit was announced there was a spike in activity in the market, which again reiterates the fact that it is uncertainty holding buyers back rather than a lack of interest. Once activity starts to increase and buyer confidence returns, which it will, prices will start back on an upward trajectory.”