Back in October 2018, the country’s largest mortgage lender, the Halifax, announced that there have been fewer homes for sale in the UK than in any previous year within the last decade.
In addition, in September UK, house prices unexpectedly fell at their fastest pace for almost six months. The average house price is now £225,995, down by 1.4% from the level recorded in August. However, the price of a home remained 2.5% higher than a year ago.
House price growth is being limited because household incomes are being squeezed. This is preventing many people from getting onto the housing ladder, and home owners from moving house, particularly if they are looking at trading up to something bigger. It is this that contributes to the rate of house price growth. In addition, the Bank of England has very gradually started to raise interest rates, pushing up mortgage costs.
Samuel Tombs, the chief UK economist at the consultancy Pantheon Macroecomics commented that “Few households think housing is a good investment at present.” He went on to add that “The combination of rising mortgage rates and heightened economic uncertainty will weigh on demand over the next six months, ensuring that year-over-year growth in house prices barely exceeds zero”
Undoubtedly, Brexit will be the biggest influence on house prices and how stable they remain. In sombre mood, Mark Carney, Governor of The Bank Of England, predicted that a disruptive, no-deal Brexit could take up to 35% off UK house prices.
However, until it happens, the final terms of Brexit remain unknown. Depending on your personal circumstances, we would advise two main courses of action. If your purchase is likely to be a longer term one, carry on regardless, as house prices will likely increase over the longer term anyway.
If, on the other hand, your purchase is likely to be for a shorter period, hang on to your money, and go back to the estate agents next summer – there should be a clearer picture then.