This morning’s figures released by Nationwide have painted a rather gloomy picture of the UK housing market. After a largely inactive start to the year, annual house price growth crawled up by 0.4% in February.
After taking account of seasonal factors, there was a marginal house price fall month on month.
Robert Gardner, Nationwide’s Chief Economist, comments: “After almost grinding to a complete halt in January, annual house price growth remained subdued in February, with prices just 0.4% higher than the same time last year.
Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, but survey data suggests that sentiment has softened. Measures of consumer confidence weakened around the turn of the year and surveyors reported a further fall in new buyer enquiries over the same period.
While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months.
An uptick in the home ownership rate
The latest English Housing Survey from the Ministry of Housing, Communities & Local Government (MHCLG) showed a slight rise in the home ownership rate in 2018 to 63.5% (from 62.6% in 2017).
The rise in home ownership was driven by an increase in the number of people owning their home with a mortgage, which began to increase again after declining continuously since 2005. The number of people owning their own home with a mortgage rose by 5% over the year to 6.9 million, though this is still 20% below the peak recorded in 2000.
Supportive labour market conditions and a number of policy changes, especially in the regulatory and tax system, have improved the bargaining position of home buyers relative to investors. Government schemes, such as Help To Buy equity loan, have also helped support first time buyer numbers.
The biggest improvement in home ownership over the past year has been amongst those aged 35-44, helping to reverse some of the decline seen in the last few years. Nonetheless, at 57%, the home ownership rate amongst this age group is still well below its 2006 peak of 73%.£
Andy Soloman, Yomdel CEO, said: “A sluggish start to the year for the UK property market and one that has become all too familiar as the wheels continue to fall off of our exit from the EU.
Despite this lethargic market movement, the dream of owning our own homes continues to underpin the UK housing market as our resilience as a nation defies wider political influences to see homeownership rates continue to climb. This has been supported by the continued affordability of mortgage rates and while prices remain fairly static, it is at least encouraging to see many continue to climb the ladder. With unemployment falling and wage growth on the up, we have all the ingredients required for a buoyant housing market, it’s just a case of sitting tight and waiting for the clouds of uncertainty to lift.”
Marc von Grundherr, Director of Benham and Reevers, had this to say:“While sluggish, growth is growth and it’s great to see the market finding its feet so early in the year despite so much uncertainty still looming as a result of the B word. The year ahead is likely to be erratic but there is very much an appetite for homeownership that won’t be dampened by political uncertainty, and once this gloomy outlook breaks the strength of the UK market will become all the clearer.
London has been worst hit by political uncertainty with top-line indicators suggesting next to no price growth what so ever since the EU Referendum. However, if you think that dust is collecting on for sales boards across the capital and estate agency branches will remain under lock and key until a decision is made, you are sorely mistaken.
There is most definitely an undercurrent of activity across the London market and an air of opportunism amongst investors as despite a string of penalties against the buy-to-let sector, the London’s property market remains a very attractive proposition.
Not only is this the case in the investment circles but the number of first-time buyer mortgage approvals is up annually, along with the number of new home movers, so it would certainly seem the appetite for London living is starting to build once again.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The 2019 housing market clearly hasn’t quite taken off in the way many hoped or expected. Although activity is better for some price brackets and property types, buyers and sellers are caught in a dilemma.
Are concerns over Brexit outweighing positive improvements in affordability and employment, combined with continuing low borrowing costs? The result is inaction for many, other than first-time buyer numbers which remain one good news story as they profit from reduced landlord competition for smaller, lower-priced properties, which will certainly benefit the whole market.
Looking forward, we are not expecting much change until at least the odds on a Brexit deal shorten and perhaps more encouragement for housing in the forthcoming Spring Statement.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The spring-like weather has not quite filtered through to the housing market with price growth remaining subdued. Uncertainty over Brexit continues to have an impact and is likely to for the next few weeks at least.
On the lending front, the numbers of people owning a home with a mortgage is on the rise as lenders remain keen to lend and rates are extremely competitive. Indeed, several lenders continue to trim rates in an effort to encourage more business, while innovative tweaks here and there are increasing as an alternative to offering the cheapest rate in the market.
First-time buyers continue to grow in numbers as lenders offer more products at high loan-to-values and the Help to Buy scheme remains popular, despite its critics. This is good news for the market as a whole.”
Dilpreet Bhagrath, fromTrussle, comments: “House price growth has remained slow throughout February. With Brexit still at the forefront of minds, many of those hoping to move are reluctant. This will likely have an impact on property price growth.
While the number of homes coming onto the market has slowed, there are still some good deals to be had, particularly for first-time buyers not in a chain who are able to move quickly. Those who do find their dream home should take into account their current and future personal circumstances and consider opting for a fixed-rate mortgage for the stability of knowing how much they’ll pay each month.”