The news surrounding the UK’s property market during April has been interesting, as always. We’ve picked out a few highlights to help keep you abreast of everything need to know!
First of all, we’re going to start with some house price news from the monthly Nationwide and Halifax indices, before moving onto some other relevant reports.
Mixed messages from UK lenders
Nationwide produces one of the timelier house price reports and its March index, released at the beginning of April, showed that according to its own mortgage lending activity, the average UK house price was 0.2% lower in March than February at £211,625. Nationwide’s data also placed the price a UK home 2.1% higher than in March 2017.
Those figures imply a broadly stable house price market. And, while the recent slowdown in inflation and increase in wages growth might suggest price growth should be stronger, Nationwide said subdued consumer confidence was helping to keep house prices pretty steady.
The Halifax house price index, meanwhile, whose data is also based on its own mortgage lending activity, said that house prices rose 1.5% on the month in March and by 2.7% on the year. Thar’s a more upbeat picture than the Nationwide report.
But, Halifax pointed to still slow levels of housing activity and said that despite the rise to fresh new high average house price of £227,871, the number of home sales have been generally flat in recent months. In addition, uncertainty, Brexit and the still high price of property relative to earnings, means that affordability remains stretched leaving little room for much upside movement in house prices.
But, prices are still expected to rise by around the 3% mark over the course of 2018.
“In the coming months we expect price growth to remain close to our prediction of 3% despite the very positive factors of continuing low mortgage rates, great affordability levels and a robust labour market,” said Russell Galley, managing director of Halifax. “The continuing shortage of properties for sale will also support price growth.”
Broader house market activity remains muted
The monthly housing survey from the Royal Institution of Chartered Surveyors, (RICS) for March is more in line with Nationwide. Although, there are elements that chime with the Halifax report, too.
The RICS survey for March showed:
- House prices were generally flat on a national level, although regional variations remain.
- The number of new properties being put up for sales fell for a seventh straight month.
- Agreed sales and new buyer inquiries declined in March.
Affordability constraints were highlighted as a main reason behind the flat national house price picture and falling prices in London and south east England. And, while surveyors continue to anticipate little movement in house prices over the next three months, they’re also still optimistic that price growth will return – however mildly – 12 months from now.
The results from surveyors around the country also suggest that the divergence in price movements between London and the south east and some northern regions, is likely to persist for some time.
Mortgage lending activity
More data published in April concerns mortgage lending activity. Figures from the latest UK Finance mortgage report looks back at mortgage lending activity in February. The mortgage body noted that compared with a year earlier, mortgage lending among first-time buyers, home-movers and remortgagors was higher than the same month in 2017.
Activity among first-time-buyers and home-movers was actually the strongest – for the month of February – in over ten years, UK Finance noted.
And, while there were fewer new buy-to-let mortgages agreed in February than a year earlier, BTL remortgage activity was stronger.
It’s likely that the flurry of remortgage activity is linked to home-owners and investors getting locked-in to a good deal before the Bank of England begins to raise interest rates.
However, comments from BOE Governor Mark Carney during April, suggest rate rises may be slower than anticipated by some, due to the pressures Brexit will likely exert on the economy.
"Prepare for a few interest rate rises over the next few years," Carney told the BBC in an interview.
“The biggest set of economic decisions over the course of the next few years are going to be taken in the Brexit negotiations and whatever deal we end up with…. And then we will adjust to the impact of those decisions in order to keep the economy on a stable path.”
Overall then, the picture painted by the latest data published during April is one of broadly subdued housing market activity. Sure, things aren’t as bad as they’ve been; house prices are rising from year earlier levels, as is mortgage lending activity.
However, despite an improved personal finance position, thanks to lower inflation and higher wage growth, consumers are still uncertain. And when households aren’t feeling confident about their finances, they tend to put off major purchases, including buying a home.
With that in mind, don’t be surprised to see more of the same kind of data for a few months yet – at least until more detail on Brexit is uncovered and in the wake of the upcoming May BOE meeting.