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Is the Brexit effect on the property market beginning to wear off?

Declines in activity are starting to ease off, the Halifax says, but despite high employment prices have been starting to soften.

Nigel Lewis

House price rises are beginning to stall as the UK’s housing market continues to be subdued despite strong levels of employment, the Halifax says, although recent declines in activity are levelling off.

During May house prices increased by 1.9% year-on-year to £224,439, down from 2.2% in April, although the month-on-month figures are better revealing a 1.5% increase during May, much better than the worrying 3.1% decline the month before.

Traditionally the Halifax doesn’t like to do much crystal ball gazing, but Managing Director Russell Galley (pictured, below) says the months of decline in activity within the property market appear to be ending.

“After a sharp rise in January, mortgage approvals have softened in the past three months [but] both newly agreed sales and new buyer enquiries are showing signs of stabilisation having fallen in recent months,” he says.

“The continuing strength of the labour market is supporting house prices. In the three months to March the number of full-time employees increased by 202,000, the biggest rise in three years.

“We are also seeing pay growth edging up and consumer price inflation falling, and as a result the squeeze on real earnings has started to ease.”

But Jeff Knight (pictured, right) of Foundation Home Loans disagrees.

“Demand may have weakened slightly, particularly as those keen to get onto the property ladder instead choose to bide their time and wait for Brexit uncertainty to settle,” he says.

“However, supply remains an issue and this is keeping prices inflated and out of reach – particularly in the capital.”

Flat market

The Halifax also reveals how apartments are continuing to take a larger slice of the property market, and that they are increasing in value the fastest. Flats now represent 15% of all homes in the UK and have increased on average in price by 48% over the past five years.

Read more analysis of the property market.

 

June 8, 2018

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