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TODAY'S OTHER NEWS

Brexit bites as house price growth drops to near six-year low

A slew of property experts and commentators have put the blame on Brexit for a surprise drop in house price growth and the broader lacklustre market.

Jeremy Leaf, the north London estate agent and former RICS residential chairman, says of the surprisingly-downbeat Nationwide figures for December: “They are confirming a bit of a wake-up call for the housing market in that after steady progress, without much change one way or the other, prices have experienced a nasty bump … There is a substantial fall in price growth on an annual basis, as well as the monthly drop in prices, and reflects a time of particular political turmoil as we came towards the end of the year when the Brexit debate was reaching its height.”

The Nationwide data revealed house prices to be growing at their weakest pace since February 2013, rising by just 0.5 per cent last month compared to a year ago - and of course after inflation, this represents a fall in real terms.

Just a month earlier, prices had been rising at around 2.0 per cent. 

The Nationwide says the uncertain economic outlook was undermining consumer confidence in the market, "given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs”.

Robert Gardner, Nationwide's chief economist, says the market's prospects for 20219 depend on how quickly uncertainty lifts, "but ultimately the outlook for the housing market and house prices will be determined by the performance of the wider economy – especially the labour market”.

Howard Archer, chief economic advisor to the EY ITEM Club - a think tank that feeds in reports to the Bank of England’s monetary policy committee - says the Nationwide figures are a sign that “Brexit uncertainties [are] having increased impact on the UK housing market.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “As we move closer to a Brexit resolution one way or another, there is still more uncertainty on the horizon but lenders remain keen to lend and mortgage deals competitive.”

Separate to the Nationwide figures, respected lettings expert David Lawrenson begins his latest newsletter with a description of how Brexit is hitting the market at the start of 2019.

“Property businesses like many other businesses remain in a sort of Brexit freeze, with much investment being put on hold. This naturally extends to the housing market too - transaction levels here remain low as are stocks of houses for sale. House prices remain subdued in places like London, especially in the more prime areas, though some areas in the north of England and Wales are still seeing healthy rises in prices” he says.

“If there is a ‘good Brexit’, another referendum or even an acceptance of Prime Minister May's current deal, then the certainty that comes with knowing the way ahead could see the housing market rebound quickly” he adds.

And in The Times, in an article headlined ‘A Year To Stay Put Or To Take A Risk’, the paper’s property editor Anne Ashworth says of the lacklustre housing market: “Brexit is almost universally seen as the culprit for this absence of enthusiasm, which has spread to previously buoyant locations.”

The Nationwide’s figures gave a mixed picture across the regions.

Amongst the UK nations Northern Ireland recorded the strongest growth in 2018, with prices up 5.8 per cent, though Wales also recorded a respectable 4.0 per cent gain. By contrast, Scotland saw a more modest 0.9 per cent increase, while England saw the smallest rise of just 0.7 per cent over the year.

Robert Gardner says: “One of the more prominent regional trends in 2018 was the further narrowing of the north-south house price divide in England. Price growth in the south (London, Outer Metropolitan, Outer South East, East Anglia, South West) moderated throughout the year, while in the northern regions (the North, North West, East and West Midlands, and Yorkshire & Humberside), price growth remained broadly stable in the 3.0 to 4.0 per cent range.

“This trend was not entirely unexpected, however, as it followed several years of sustained outperformance by the south (especially London and Outer Metropolitan) which left affordability more stretched in these areas.

“Indeed, even though house prices have been rising more quickly in the north of England since Q2 2017, price levels are still significantly higher in the south. The price of a typical home in the south of England (£329,240) is still almost double that in the north (£166,642).”

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