This week’s Property News article is presented by The Property
As property market news for the new year sheds light on what to expect in 2018, an unusually conservative assessment emerges from Halifax that demands attention.
UK lender Halifax published a pretty pessimistic outlook for UK house price growth, putting a dent in the stocks of housebuilders and an uncertainty as to what your house is worth. While this was not completely unexpected, it marks a worrying time for those with a stake in the property market, as the period of uncertainty for Great Britain after the Brexit referendum continues to bite away at people’s pockets, making getting an accurate house valuation all the more difficult.
A solemn foundation for property market news in 2018?
If this is your first visit to our site, know that the readings of the UK housing market we have come to expect from Halifax are usually rather more optimistic. But they have said that property prices over the last three months of 2017 rose by just 2.7%, compared to that same three-month period back in 2016. That’s a drop from the growth of 3.9% in November, and the 4.5% recorded in October. The latest reading fell short of forecasts significantly; analysts in the Reuters poll were predicting a growth of 3.3%, so growth has slowed noticeably. This is a trend that suggests the uncertainty after Brexit is damaging property values.
There is still uncertainty of what is going to happen now that Britain has voted to leave the EU. (Read more about Brexit from the Daily Express – click here) Uncertainty following Brexit also extends to the UK Property Market. Mark King Properties, (South Wales based property investor) explores this issue and the effect it may have on house prices in more detail, click here to read the article.
Reflecting on property values, prices actually fell by around 0.6% in December, which was the first downturn since June of 2016, according to Halifax. As property market news goes, this is not the way many would have hoped things would be going into 2018.
Analysing the figures, the managing director of Halifax Community Bank observed that the pattern of the housing market in 2017 was similar to that of the year before. There was a slow in the growth of house prices, even in the south-east, and a distinct flatness to all building activity, sales completed and approved mortgages for purchasing a house. He attributed this pattern to an observed squeeze on the real growth of earnings and the ongoing uncertainty about the future of the British economy.
What he did predict, however, is that house prices in 2018 will probably be supported by scarcity – few properties for sale, housebuilding at low levels, high rates of employment and low-interest rates that will promote the servicing of mortgages. The forecast stands at a predicted growth in house prices in the 0-3% range when we reach the end of 2018. So if you’re asking the question “What is my house worth?”, you may not need to fear a drastic plummet in prices in these uncertain times.
Currently, the average price of a UK house stands at £225,021, with prices in London typically topping the scale. Analyst Sam Tombs from Macroeconomics commented on the data released by Halifax showing house price growth slowed. He said that it shows how the recent rise in new mortgages has had a dampening effect on a property market that was already showing signs of price rises flagging. The Halifax index had been indicating a rise of 3.6% from June to November; a strength that had not been reflected by other indices. In Tombs’ opinion, a correction was well overdue.
Tombs went on to say that he expects the recent reforms made to the stamp duty rules for first-time buyers, as well as the ongoing shortage of existing homes being put on the market, should ensure a stabilisation of house prices in 2018. In other words, he doesn’t expect there to be an outright fall in the value of properties through 2018, despite the uncertainty of the Brexit negotiations.
With this property market news entering the public realm, it was no surprise to see that shares in housebuilders saw some of the biggest descents on the London stock market at the start of the second week of January 2018. Barratt Developments and Taylor Wimpey were the leaders in the sector lower, both going down by 1%. Closely following were Persimmon, who saw a fall of 0.9%.
As the year continues, we can only wait and see what property market news unfolds, but the outlook is a cautious one for anyone for people hoping to profit from the sector. These are uncertain times in Britain, and the property market is not immune to uncertainty.