A crisis of confidence on the part of buyers and sellers looks set to bring the property market to a standstill, according to the latest Asking Price Index from Home.co.uk.
London is the worst affected by this crisis of confidence, brought about by Brexit uncertainty, where a lack of demand means that the typical time on market for unsold properties has soared by 23%. At the same time, vendors’ reluctance to commit has meant that housing supply has dropped by 28% in the year to May.
Market pessimism is widespread, as Brexit uncertainty, combined with the post-boom malaise, continues to hamper property sales. Meanwhile, house prices appear to be hovering for the time being, while both demand and supply shrink.
Negative sentiment is increasing and has applied the brakes to the normally surging late spring property market, as evidenced by typical time on market figures, which are longer in every single English region, plus Wales and Scotland.
A wait-and-see attitude is stifling both supply and demand. So far, these exceptional strains on the market have had little net effect on the established pricing trends, but property values appear to be levitating, based more on aspiration than any real underlying market fundamentals.
Overall, annual house price growth in England and Wales remains just in the red, at -0.2%, despite a monthly rise of 0.5%. Spring optimism has managed to lift prices in all of the English regions, Wales and Scotland, although this appears to be driven by wishful thinking on the part of a reduced number of vendors, rather than by demand, as properties spend longer and longer on the market.
London’s annual losses have notched back again slightly, from 3.1% to 2.9%, and now total 6.7% since the start of the price decline in May 2016. Asking price falls in the South East continued to ease (now 1.5% year-on-year), but worsened in the East of England (3.0%), where the post-boom price correction is fully underway.
Overall, the supply of property for sale entering the UK housing market is down by 9%, while the total stock for sale has risen by a mere 1.7% annually, as an increasing number of vendors withdraw from the sales market altogether (up by 6.5% year-on-year).
In May 2018, the annual rate of house price growth stood at an average of 1.1%. Today, the same measure is -0.2%.