A shortage of homes on the market helped UK house prices rise 0.3 per cent month-on-month in July, according to the latest Nationwide Building Society index.It was the second month in a row Nationwide had reported an increase and brought the average price across the country to £211,671, representing an annual increase of 2.9 per cent, compared to a growth rate of 5.2 per cent in July 2016.

Lack of homes effecting prices

Robert Gardner, Nationwide’s chief economist, said he expected price growth this year to be around two per cent. “A lack of homes on the market appears to be providing support, with annual house price growth remaining only just outside the three to six per cent range that has been prevailing for most of the past two years.“This pattern looks set to be maintained in the near term. Survey data point to relatively sluggish levels of new buyer inquiries, but at the same time surveyors report that relatively few properties are coming on to the market.“While employment growth has remained relatively robust, household budgets are coming under pressure as wage growth is failing to keep up with the rising cost of living. This suggests that housing market activity is likely to remain subdued, with the balance in the market shifting a little further towards buyers in the quarters ahead.”Last month, a survey by the Royal Institution of Chartered Surveyors (RICS) showed estate agents had fewer properties on their books than at any time over the past 40 years and HM Revenue and Customs reported that, in June, the number of housing transactions had dropped to its lowest for eight months.Jonathan Hopper, managing director of Garrington Property Finders, said that constrained supply was helping price growth defy economic gravity. “Despite the slowing economy and shrinking real wages, house prices continue to creep upwards at a steady pace,” he said.“While there’s little evidence yet of the hoped-for surge in post-election demand, we are seeing a return to market of a number of cautious buyers who had been waiting for a little more stability before proceeding.“In many areas it is they who are setting the tempo of the market – acutely price sensitive and willing to walk away if they feel the price isn’t right.“With the RICS data showing a steady fall in both the number of homes and the number of buyers coming to market, we’re seeing a slow-motion stand-off on prices.“Limited supply is propping up prices, while the limited number of buyers is giving the astute house-hunter the leverage to negotiate hard on price and secure sizeable discounts.“With pragmatic sellers often willing to trade price reductions for the certainty of a sale, the market’s fundamentals remain in place even if the pace is slowing. With the summer holidays now in full swing, this low-growth limbo is likely to continue for a while longer.”Mark Weedon, head of institutional development at buy-to-let investment platform Property Partner, commented, “While landlords won’t be jumping for joy with house price growth of 0.3 per cent last month, overall, continued long-term steady growth is positive for the sector.“Despite uncertainty across the political spectrum, with the realities of Brexit slowly starting to become more clear, house prices again demonstrate their resilience.“Simply put, this index highlights the strength and stability of the housing market. Mortgages look set to remain good value and the lack of housing stock nationally shows no sign of abating – something which will continue to support house prices.”

Houses prices – supply and demand

Lucy Pendleton, director of independent estate agents James Pendleton, said, “Market conditions just beneath the surface are keeping this ball in the air despite much talk recently of the market starting to roll over. The big question is where is support for house price growth coming from?“Supply and demand is always a supportive factor but this kind of market behaviour shows just how imbalanced it has become. Prices seem to be finding any excuse to hold their ground and exploiting it. The cause has to be lack of supply placing a squeeze on the number of homes coming to market helped in June by mortgage approvals slumping to a nine-month low with transactions levels also depressed.“First-time buyers may have also played their part in mopping up over the last few months, spying opportunities as prices dipped. Prices fell for three straight months between March and May but before that you would have to go back to June 2015 to find the previous monthly fall.“These slight contractions were not dramatic however, particularly when you consider the traditionally slower summer months have often begun with more severe falls than this. Given there are other factors at play, including a squeeze in consumer spending, this could be seen as a sign of confidence among buyers.”

---

Related stories:

• House prices in Northern Ireland starting to gather momentum
• Zoopla finds 'micro-markets' developing for UK homes
• UK house prices 'rising at slowest rate since 2013'

---

Jonathan Samuels, CEO of the specialist property lender, Octane Capital, added, “Weak supply has once again ridden to the rescue of house prices. While demand is down at a time of economic and political uncertainty, the shortage of homes, both for sale and being built, is preventing prices from falling sharply.“The prospect of the first interest rate rise for many years, and the potential fallout that will ensue, is causing many households to err on the side of caution.“Record low mortgage rates are helping what demand there is but it’s hard to see anything other than a sideways moving market for the rest of 2017. In the current climate, it’s unlikely demand will increase sufficiently to drag the market out of its current rut.”For related news and features, visit our Residential Property section.

Access hundreds of global services and suppliers in our Online Directory

 

Get access to our free Global Mobility Toolkit

©2024 Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.