Housing market gets off to weak start in January

Marco Green
February 9, 2019

House prices in the United Kingdom fell 2.9% in January from December and the annual growth rate slowed sharply as Brexit fears put off buyers, according to Halifax, one of Britain's biggest mortgage lenders.

In January alone, house prices fell 2.9 percent, a sharper drop than anyone forecast in the poll and more than reversing a 2.5 percent increase in December. The survey, which has been running since 1983, is based on seasonally adjusted data and the prices of homes bought by Halifax and Lloyds customers.

"However, the bigger picture is actually that house prices have seen next to no movement over the previous year, with annual growth of just 0.8 per cent".

"This could either be viewed as a story of resilience, as prices have held up well in the face of significant economic uncertainty, or as a continuation of the slow growth we've witnessed over recent years".

'However, the bigger picture is actually that house prices have seen next to no movement over the previous year, with annual growth of just 0.8 per cent.

House prices dropped almost 3% last month after a surprisingly strong December.

"The January Halifax data fans suspicion that heightened consumer concerns amid increased Brexit and economic uncertainties are now affecting the housing market", said Howard Archer, chief economic adviser to the EY ITEM Club consultancy.

According to Halifax, the quarterly figure provides the clearest indication of overall market trends, "smoothing out the monthly volatility caused by the reduced number of monthly transactions used to calculate all house price indices".

Other surveys and the official data point to a slowing United Kingdom market, with prices declining in London and parts of the south-east because of Brexit uncertainty, stamp duty changes and a lack of affordable properties.

He said: "Flat growth is probably the best we can hope for given the current tricky political situation we find ourselves in".

North London estate agent and former Rics residential chairman, Jeremy Leaf, warned that a Brexit deal is vital in order to give the housing market a lift.

Hansen Lu, a property economist at consultancy Capital Economics, thinks a house price collapse is unlikely, even if the United Kingdom departs the European Union without an agreement.

Halifax managing director Russell Galley said price growth is expected "to remain subdued in the near-term".

"If the United Kingdom does enjoy a good European Union exit, then a relief rally could be in store given the plentiful government support for buyers, cheap borrowing and rising wages coupled with low supply", added Pendleton. If the United Kingdom exits without a deal, house price growth would be even slower, or even fall gently.

"The coming months are likely to bring some small green shoots of price stability and once we emerge from our Brexit blanket in to the cold light of day having reached an agreement, further stability and upward growth should return to the market", he added.

Other reports by Click Lancashire

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