The UK housing market remained resilient in August, despite prices remaining relatively static since March, according to the latest Halifax House Price Index.
UK homes were worth an average of £233,541 last month, having grown 1.8 per cent year-on-year. On a monthly basis, prices grew by 0.3 per cent, suggesting continued price gains, despite a slower annual rate of growth.
The stable prices coincide with a period of political uncertainty surrounding the UK’s expected departure from the EU. The UK had originally been expected to withdraw from the EU in late March but was eventually granted an extension to Article 50 until October.
MPs have since voted to pass a bill, to request for an extension until as late as January 2020, in the event that the government is unable to secure a new withdrawal deal by the existing October deadline.
Price gains despite weakness
In August, UK home prices remained stable, despite weak sentiment in the market overall. Figures from Her Majesty’s Revenue and Customs (HRMC) suggested home sales were falling at an annual rate of 12.4 per cent, between July 2018 and July 2019.
Despite this, Halifax pointed to an uptick in mortgage approvals, citing data from the Bank of England. They noted that the volume of mortgages approved for financing home purchases rose to 67,306 in July 2019, which was an increase of 1.2 per cent since June, and the highest volume seen since July 2017.
Halifax also reported that the stock of homes-for-sale per surveyor was almost half the level seen at the peak in stock levels in 2008. Before the financial crisis, roughly 85 homes were listed for sale per surveyor, but as of July 2019, closer to 40 were found to be listed as homes-for-sale per surveyor.
Resilience amid uncertainty
The UK housing market was subject to great political and economic uncertainty earlier in the first half of 2019, but a variety of positive fundamentals helped keep it relatively stable.
Russell Galley, managing director at Halifax explained: “While ongoing economic uncertainty continues to weigh on consumer sentiment – with evidence of both buyers and sellers exercising some caution – a number of important underlying factors such as affordability and employment remain strong.”
This strength was reflected, when the Office for National Statistics reported that wages in Great Britain grew at their fastest rate in nominal terms in over a decade, in July 2019, at an annual rate of 3.8 per cent. Faster wage growth indicated more disposable income, increasing the potential for higher consumer spending.
Mr Galley concluded, saying: “Although the housing market will undoubtedly be influenced by events in the wider economy, it continues to show a degree of resilience for the time being. We should not lose sight of the fact that the single biggest driver of both prices and activity over the longer-term remains the dearth of available properties to meet demand from buyers.”