Publication

UK Housing Market Update

Uncertainty continues to dampen market sentiment

SUMMARY

House prices rose by 0.2% in March, according to Nationwide. Longer term growth has been largely flat, with values only up 0.2% since January 2018. The regional picture showed the strength to be in the North and the Midlands, with the North West, East Midlands and Scotland seeing annual growth of 2.9%, 2.6% and 2.5% respectively. London showed the greatest fall, down 3.9% on the same time last year.

Transactions volumes have also been lacklustre, with the monthly figure flat, leaving transactions down 3.8% on last year. This is reflected in the RICS Survey, which has maintained its downward trend in both new instructions and enquires. This indicates that buyer confidence is low, a likely consequence of the continued Brexit-related uncertainty. We may see more certainty emerge next week, as the 12th April deadline approaches. The spectrum of scenarios from deal to no deal, or an extension of Article 50, will all have different short and longer term effects on market sentiment. Continuing shorter term delays are likely to hold confidence at its current low level.

The wider economy has remained relatively strong, and with reduced uncertainty we could see some of this strength providing a driver for both price growth and increased transactional activity in the housing market, albeit with the greatest headroom in more affordable areas, generally further from the capital. Wage growth has been positive and the minimum wage rose to £8.21 per hour on 1st April, up 4.9%. Employment levels have also continued to increase and are currently the highest level they have been at since 1971.