What is happening to the housing market?

The industry figures for house prices suggest they are rising at their slowest annual pace in five years, with growth falling from 2.5% in September to 1.5% in October, according to the Halifax. Nationwide is in broad agreement. Both are, unsurprisingly, based on homes bought with mortgages, and exclude help-to-buy, buy-to-let and cash deals.
The figures suggest slow growth. In fact, some prices may actually be falling.

Prices are falling in London

When broken down into regions, the lenders figures show that house prices in London have fallen for the fifth quarter in a row.

According to Nationwide the average price of a home in the capital fell by 0.7% in the third quarter, compared with the same period last year, to £468,544.

London has become a weak spot in the UK property market. But despite the falls the capital remains the most expensive place to buy a property in the UK with average prices more than twice the national average of £216,103. Many potential homebuyers remain priced out of the London market, and find themselves relegated to a long commute to a home they can afford.

This long trek to find affordability seems to have boosted prices in commuter towns in recent years. But even here the pressures for house price inflation seems to be less than in recent months.

However, despite the falls, property prices in the capital are only 3% below the record highs of 2017, and in some cases 50% higher than they were ten years ago before the financial crisis. There could still be some falling to do.

What about the rest of the UK?

As usual, the picture across the rest of the UK is mixed. It looks as though there may be some house price corrections in progress.

Some towns, like Bradford, Bolton, Doncaster and surprisingly Mitcham have seen a fall. Estate agents claim that there are pockets of strong growth, and that in some areas across the West Midlands and the North West prices may have risen by almost 20% on the year. This could simply be areas where prices have been low in the past.

What is going on?

A look at Zoopla and Rightmove might help give a different perspective on the market. As many as 40% of all homes for sale have had their prices cut. This might simply suggest that many vendors have been optimistic about the price their homes will fetch. But there is an alternative explanation.

Sales volumes are low. Many people have been put off buying by large stamp duty obligations – but many more may be waiting to see what happens with Brexit. People may be putting off house buying until they see what is going to happen to the economy after next March.

The low volumes of homes for sale are distorting the market. Many agents, and especially large chains and online organisations, may have to overvalue a property to win an instruction.

In the past, this might have worked, and contributed to house price inflation. Now buyers are fewer and more wary of paying too much.  Agents who are overly enthusiastic with valuations may be forced to recommend a price reduction when few viewings are booked in.

What should you do

If you have a house to sell, you may prefer to stay in it until the market regains a little certainty – but if you are a buyer, it might be time to find a bargain.

If you would like some help in finding a mortgage which would help you buy the home you want, whatever the market is doing, call the Continuum team.

Your home may be repossessed if you do not keep up repayments on your mortgage.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.

Get in touch

If you would like to discuss further please call us on 0345 643 0770, email us at info@mycontinuum.co.uk or click on the ‘Contact Us’ link below. Thank you.


dailymail.co.uk – Almost 40% of homes for sale have had their price cut: We spoke to estate agents in the six British towns with the biggest discounts to find out why… – 6th November 2018

theguardian.com – Should I wait to buy because Brexit might make house prices fall? – 1st October 2018

inews.co.uk – Will house prices fall after Brexit? – 10th October 2018

telegraph.co.uk – House price growth falls to five-year low – 7th November 2018

theguardian.com – London house prices fall again as stamp duty and Brexit fears bite – 2nd October 2018

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