Outlook for UK housing market ‘remains clouded’

As the first of January’s house-price reports is published, Relocate asks some industry insiders how the UK housing market is shaping up so far this year.

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The annual rate of UK house-price growth fell to 4.3 per cent in January – its lowest in more than a year – according to the latest property index from Nationwide Building Society.Although month-on-month prices rose by 0.2 per cent in January, the annualised rate was down from December's 4.5 per cent, representing an average UK house price of £205,240.Robert Gardner, chief economist at Nationwide, said that, while price growth remained “broadly stable” at the start of 2017, “the outlook for the housing market remains clouded, reflecting the uncertainty surrounding economic prospects more broadly”.He added, “On the one hand, there are grounds for optimism. The economy has remained far stronger than expected in the wake of the Brexit vote. Recent data indicates that the economy didn't slow in the second half of 2016 and the unemployment rate remained stable at an 11-year low in the three months to November.“But with inflation set to rise further in the months ahead as a result of the weaker pound, real wages are likely to come under further pressure. Employment growth is also likely to continue to moderate, should the economy slow as most forecasters expect.”
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Industry comment

Rob Weaver, director of investments at property crowdfunding platform Property Partner and a member of the residential committee of the British Property Federation, said, “Despite the UK housing market softening somewhat, prices continue to clamber up unremittingly.“The severe shortage in stock and available homes for sale is the underlying dynamic propping up prices, coupled with ultra-low borrowing rates. Estate agents appear to have a dearth of properties on their books and, hence, demand keeps outstripping supply. And although it’s early days, we expect, over 2017 as a whole, that price growth will remain positive.“London, formerly the runaway leader in the UK property market, has seemingly lost momentum in prime central locations. But outer boroughs in the capital, particularly areas of regeneration and along the Crossrail route, could potentially see house prices steam further ahead once the stations are complete next year.”Ben Madden, managing director of London estate agent Thorgills, added, “House prices continue to sit safely nestled in the eye of the storm. While impacting political events swirl around, the steady upward march of house prices remains underpinned by a shortage of housing stock and ongoing low borrowing costs for buyers.“These two key factors seem unlikely to change in the short term while the economy seeks steady ground ­– although prospective buyers will have half an eye on the outcome of tomorrow's [Bank of England] interest-rate meeting.”

Brexit impact

Jonathan Hopper, managing director of Garrington Property Finders, commented, “The annual rate of price inflation is virtually the same as it was at this time last year, and, six months on from the Brexit earthquake, the market has settled into its familiar pattern of steady growth.“But the days of double-digit price rises are gone, and while the market fundamentals are strong enough to drive further growth this year, progress will be sedate rather than stellar.”Mario Berti, CEO of Octopus Property, said, “The predicted unravelling of the property market in the aftermath of the EU referendum vote last June simply hasn’t materialised. Let's also not forget that the UK is a great place to be doing business. Growth in the UK exceeded that of the EU and the US in 2016, and the outlook is very positive.“House prices may have nudged down very slightly on an annual basis but the UK property market remains stable. Rising inflation could play havoc with household finances, which have the potential to impact confidence and in turn property values, but borrowing costs are still exceptionally competitive.”In the Winter 2016/17 issue of Relocate magazine, David Sapsted looks at some of the key international locations bidding for a piece of the post-Brexit action, and canvasses the views of business leaders and politicians. 

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