House prices in the UK have been stuck in the doldrums for some time now, with areas such as London and the South East suffering more than others as Brexit worries impact. With
economic uncertainty looming, banks are beginning to take a more cautionary approach to lending.
What Are The Figures?
House prices have also been heavily affected in certain areas where the living cost ratio is high. The key areas where this has impacted is the South East and London. The Office for National Statistics said that house prices in the UK rose by an average of 0.6% in the year to February, the lowest rate of growth since September 2012, and down from 1.7% in January. The slowdown was mainly due to the price of an average London home falling by 3.8% over the year, the steepest drop since mid-2009, in the depths of the last recession.
Where Does This Leave Investors?
So, with all these headwinds, it is not surprising that people are sceptical of the property market, and investors have to date remained cautious and opted to wait rather than enter the market. However, there are some areas that over the last few years have bucked this trend. Admittedly, Brexit didn’t help them and did act as a drag, but low affordability levels meant that
areas like the North West and North East of England continued to see prices push higher.
What can we expect from the next 6-12 months?
In our opinion, we are predicting that Nationwide over the next 6 months we will see a steady rise in prices although turnover will remain a little subdued. So why do we believe this will be the case? Simply put, given the stagnation in activity especially over the last 6 months sellers have begun to hold off from marketing their properties, and buyers who were reluctant to move a few months back are now beginning to show renewed interest, especially post the Brexit extension. However, with a lack of stock on their books, buyers who are now actively looking are realising that there is a distinct lack of property. From agents we have spoken to in London requests for details on properties and viewings is on the up, and supply remains thin.
To this extent, there is likely to be a demand-driven squeeze in asking prices over the next few months that will lead to further anxiety from buyers who feel they may be missing out and add to the pressure higher. Obviously, we are not talking about a dramatic shift higher, but what is quite evident is that the lows hit in the past months are beginning to look like the distant past. This is very much evident in those areas that suffered the most but is also relevant in the areas that had been doing well too. Again as mentioned earlier parts of the North of England and elsewhere continued to grow, but the pace was slowed somewhat by Brexit, and it now feels that people have finally realised that this debate could go on far longer than they originally thought and that it was now time to make decisions and get on with their lives.
The expected fallout from Brexit, voiced by Mark Carney at the back end of 2018, is now looking unlikely, and the economic impact less severe so people are now willing to take the plunge. Property is a cyclical market, and you are not always going to hit the lows when buying and the highs when selling, you just need to be sensible and as long as the business decision is the right one then the time is always right!