Both political and economic uncertainty, coupled with a dip in housing sentiment and property transactions due to Brexit have led to fears that uncertainty will dominate the market in 2017.
As property transactions continue to fall, property purchases remain down on last year. This is partly down to the ongoing lack of supply, while UK property prices growing at their weakest yearly rate in more than a year during 2017.
Latest data released by mortgage lender Nationwide shows that annual growth slowed from 4.5% in December to 4.3% last month, the weakest growth since 2015.
Month-on-month, the average price of a property in the UK rose by 0.2% to £205,240-following a rise of 0.8% during December.
Jonathan Hopper, managing director of Garrington Property Finders, observed: ‘January’s icy weather was mirrored by a chill in the housing market. But though the national average price of a home fell by a few hundred Pounds, momentum remains. The annual rate of price inflation is virtually the same as it was at this time last year, and six months on from the Brexit earthquake, the market has settled into its familiar pattern of steady growth.’
‘But the days of double-digit price rises are gone, and while the market fundamentals are strong enough to drive further growth this year, progress will be sedate rather than stellar,’ he continued.
Will caution dominate the housing market in 2017?
Mr Hopper believes that while consumer confidence is buoyant, January’s rise in inflation could be a sign of things to come.
Hopper noted: ‘With the prospect of an interest rate rise – and of the cost of living rising faster than people’s wages – back on the horizon, caution will become a dominant force in 2017. With the only certain thing about the Brexit saga being that it will continue to generate uncertainty, accurately forecasting market conditions over the coming months is a huge challenge.’
‘On the front line we’re seeing that buyers are frequently price sensitive, yet committed. Prices are being supported by the imbalance between demand and supply, but good deals are being done on correctly-priced quality homes. The modestly improving picture painted by January’s index may well set the tone for the year ahead. On this evidence we will see further price rises, but at a more subdued pace as house price to earnings ratios begin to bite in many parts of the country and restrict price growth,’ Hopper concluded.