Staying Put

UK property prices have fallen for the first time in nine years, since September 2010. The latest house price index from online property website, Rightmove, suggests that there is little sign of the market bouncing back this autumn. With analysts citing increasing political uncertainly as the main reason that people are holding off from moving house.

As we approach another Brexit deadline, there are clear signs that many potential buyers are putting their moving plans on standby. This is in contrast to August, when the number of sales increased. Miles Shipside, director of Rightmove comments “In August we reported a pre-Brexit buying spree with the number of sales agreed up by over 6% compared to the prior year, as buyers and sellers decided to get deals secured well before the next Brexit deadline. A month later, as the deadline gets closer and tensions heighten, there has been a big swing the other way with sales agreed numbers now over 5% below those of a year ago.”

This is underlined by the fact that asking prices appear to have softened over the past month, with Rightmove reporting an average decrease across the UK of 0.2%.

In addition to the reduction in house prices, the number of new properties being listed for sale is also lower year on year, with 7.8% fewer sellers putting their home on the market.

Nonetheless, it’s not all bad news, it’s important to remember that the underlying market fundamentals remain sound; mortgage product rates are at or near to record lows as lenders continue to compete for market share, employment levels remain high and inflation remains at the Bank of England’s target of 2%. Also, the year to date figure shows that the average sales agreed numbers are only down by 3.4% year to date.  As Miles observes “Many have got used to living in the jaws of uncertainty since the referendum over three years ago and have been getting on with their lives and housing moves.”

Consequently, those who are planning to buy or trade up and remain confident to go ahead with the sale may find that they are in a stronger position to negotiate and gain a better deal.

There is also some regional variation as some areas of the UK feel far more confident about economic factors than others. This is most apparent in the London market, which has been stagnant since 2016, whilst many other areas have seen steady movement. As Miles comments: “All regions are down on their numbers for both sales agreed and properties coming to market. Some regions are just marginally behind the previous year, but they are all seeing less activity in these two key metrics showing that hesitation is now more widespread rather than being localised to just some parts.

Buyers and sellers remain cautious, however as Jeremy Leaf, former RICS residential chairman states; “These results are not surprising in view of continuing uncertainty, but it is disappointing that we are seeing so little improvement at a time when we might have expected more of a pick-up.”  However, there are signs that the market may not be in terminal decline but adjusting to the price increases over the last few years, with sales being agreed at more realistic levels.