Agents warn of market stagnation until Election and Brexit fog clears

Agents have interpreted the latest house price figures as evidence that the market is in limbo waiting for the Brexit - and now General Election - fog to clear.

The Nationwide’s new figures show that annual house price growth remained below one per cent for the 11th month in a row in October, at a mere 0.4 per cent. 

Average prices rose by around £800 over the last 12 months, a significant slowing compared with recent years – for example, in the same period to October 2016, prices increased by £9,100.

Jeremy Leaf, respected north London estate agent and a former RICS residential chairman, says: “Nationwide's figures … confirm that we are not seeing or expecting to see any fireworks in the market over the next few months or at least until the smoke from the political situation begins to clear. 

“What we’re seeing on the ground is a continuing determination to find common price ground between buyer and seller, which is reflected in no real change to these steady transaction numbers. There is no doubt, as far as we are concerned, that pent-up demand remains just waiting for the Brexit gun to fire before releasing what we expect to be a modest improvement in prices and activity.”

And the director of Benham and Reeves, Marc von Grundherr, comments: “We’ve seen yet more spells of uncertainty cast across the property landscape of late and this, coupled with a seasonal slowdown in the lead up to Christmas, will do little to bring a spark back to the market this side of the New Year.”

The Nationwide says that indicators of UK economic activity have been fairly volatile recently, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensifying of Brexit uncertainty. 

“The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years” explains Robert Gardner, Nationwide's chief economist.

“Solid labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook. The question is whether this pattern will continue” he suggests.

“There were tentative signs of a softening in the jobs market in the three months to August, as employment fell, unemployment rose, and wage growth slowed a little. If this trend continues it would be a significant concern, as the labour market has been the key factor underpinning the resilience of the household sector in recent years.

“However, monthly data is often volatile and the unemployment rate remains close to 40 year lows and real earnings growth - that is, after taking account of inflation - is close to levels prevailing before the financial crisis.

“If Brexit uncertainty lifts in the months ahead, hiring is likely to recover, although there may be some upward pressure on mortgage rates as investors once again contemplate the potential for UK rate increases in the years ahead. However, in the near term such increases are likely to be capped by trends in global financial markets. Weak global economic prospects continue to exert downward pressure on long-term interest rates around the world – including the UK.”