House prices rose at their slowest pace in more than six years in October, as stagnation had a continuing hold on the property market, according to the Halifax BS.
Prices edged up by 0.9% in the year to October, which was a slight decline from the 1.1% rise in the 12 months to September.
Even though sustained wage growth and record low interest rates are supporting demand, the lender said that buyers were “erring on the side of caution” in the face of continued Brexit uncertainty.
According to one source, there are brighter times ahead
If you thought Brexit was taking a long time, you haven’t tried selling a house recently. Okay, it shouldn’t take you three years, but the average sale is still taking three months – a month longer than if you were selling in 2016.
Political turmoil certainly has its part to play. Buyers and sellers are holding off because they simply don’t know what the next parliament looks like, or what kind of Brexit – if any – it wants. A firm decision in whichever direction is expected to bring certainty to the market, and with it a delightful bounce in house prices.
Richard Donnell, research and insight director at the property portal Zoopla, which surveyed selling times in UK sites, has recently said: “Once the political outlook becomes clearer, we would expect a modest bounce back in demand for a six- to twelve-month period. Regardless, removing the uncertainty caused by Brexit will do little to address levels of housing affordability, which are limiting market activity across southern England.”
This slowdown is acutely felt in cities such as Cambridge, Bristol, Portsmouth, Southampton, and Bournemouth, where homes are taking an average of 10 to 13 weeks to sell.
It appears sellers can expect to wait even longer – between 14 and 15 weeks – in places, such as London and Oxford, where house prices have sprinted ahead of average wages.
Others agree, more or less…
Hansen Lu, an economist at Capital Economics, said: “Looking ahead, the trend of sluggish house price growth is unlikely to change any time soon. In the near term, Brexit uncertainty will discourage buyers from competing aggressively in terms of price.”
Russell Galley, managing director at Halifax, said: “We remain unchanged from our view that activity levels and price growth will remain subdued while the UK navigates political and economic uncertainty.”
Manchester and the North West to lead price growth
The North-South divide in property prices will continue to narrow over the coming five years, with house prices set to rise by 24% in the North West but by only 4% in London, according to Savills.
The estate agency forecasts that average prices will rise by 15.3%, but with significant variation between regions.
Prices in Scotland, Wales and everywhere north of the Midlands are predicted to rise by 18% or more, while everywhere to the south will increase by far less.
Charlie Kannreuther, of Savills, said: “The economic pull of Manchester continues to be a major factor in the strength of the North West property market and we’ve seen a notable increase in interest from buyers outside the area, particularly from London and the South East.”